A credit card that charges no interest on money transfers can be helpful if you need to borrow money for a cash purchase or to pay off an expensive overdraft. Continue reading to learn more about how they operate and where you can find the best deals.
What exactly is meant by the term “money transfer credit card”?
With a credit card that facilitates money transfers, you can move cash from your credit card to your checking or savings account. You will frequently be given the opportunity to make an attempt to repay the debt during a period of time during which no interest will be charged.
You might benefit from using this particular kind of credit card if:
pay off a prohibitively expensive overdraft or payday loan debt.
You can get a loan with no interest if you only buy things with cash.
The primary distinction between balance transfer credit cards and money transfer credit cards is tha
t balance transfer credit cards only permit you to move debt from one credit card to another. However, money transfer credit cards can serve a purpose that is fairly similar to that of balance transfer credit cards.
How credit cards that don’t charge money transfer fees work
If you get an offer with a 0% interest period from your credit card provider, then you won’t have to pay interest on the balance of your account; however, your credit card provider may charge you a one-time fee to transfer the money (typically around 4%).
The best credit card deals for money transfers offer the opportunity to transfer a balance for a fee, with the remaining balance on the card being exempt from interest charges for a period of up to 18 months.
Let’s say you had a credit card with a limit of $2,000 and it offered 0% interest on money transfers for 18 months. You have the option of requesting a money transfer of £1,000 into your bank account. If the transaction costs the standard 4%, you will have a balance of £1,040 on your credit card and £1,000 available in your bank account to spend immediately. You would have more than a year to pay off the balance on the credit card before interest started to accrue.
If you had an overdrawn checking account and the associated fees were costing you £30 per month, it is possible that you would be better off clearing it with a money transfer and making repayments on your credit card. This is especially true if you are able to repay it before the interest begins to accrue.
Make sure a money transfer credit card is the right choice for you before you go ahead and apply for one. In essence, you will need to determine whether or not you have the financial means to pay off the debts before the 0% interest period expires, or else you run the risk of incurring significant interest fees.
Learn more about it here:
how to pay off all of your outstanding debts
The best credit card offers for money transfers that don’t incur a fee
Below you will find a selection of the most competitive deals currently available on the market. The table is arranged with the order determined by the duration of the 0% period.
Note that the information contained in this article is provided solely for educational purposes and does not in any way constitute professional advice. Before committing to any kind of financial product, you should make sure that you have read and understood the specific terms and conditions that apply to your credit card provider.
||Introductory 0% money transfer period
|| Money transfer fee
||Cost of moving £2,000
|MBNA Limited Long 0% Money Transfer Credit Card
|Representative example: assumed borrowing of £1,200 at an interest rate on purchases of 21.93% per annum variable, 22.9% APR representative variable. Credit subject to status. Terms apply.
|Virgin Money 19-Month All Round Credit Card
|Representative example: assumed borrowing of £1,200 at an interest rate on purchases of 21.9% per annum variable, 21.9% APR representative variable. Credit subject to status. Terms apply.
|Tesco Bank 15-Month All Round Credit Card
Before you apply for the card, you should make sure that you have thoroughly researched its features, interests, and terms.
The best credit card companies for 0% APR promotions on money transfers
When comparing different offers for money transfers with no fees, it can be difficult to get a sense of what it is like to work with a particular provider or how quickly problems are resolved.
Which? has evaluated 26 different credit card companies and ranked them based on the deals they offer as well as the quality of their customer service in order to assist you in selecting the best card for your needs.
Find out where top 0% money transfer credit card providers like Tesco Bank, Virgin Money, and MBNA rank among the best and worst credit card companies by reading our reviews of the best and worst credit card companies.
Golden rules for using credit cards for money transfers
There are a few things you need to be aware of and potential pitfalls to avoid when using a credit card that charges you no fees for money transfers. The most important guidelines are detailed down below.
1. Borrow no more than is absolutely necessary.
Your 0% interest money transfer deal does not have a target for your credit limit. To keep from getting into an endless cycle of debt, make it a point to borrow no more than what is absolutely necessary. If you are having trouble managing your debt, you should get in touch with a nonprofit organisation such as StepChange or National Debtline, which can provide you with free advice.
2. At least the bare minimum of the monthly payment must be made.
You are required to make a repayment on your money transfer card that is at least equal to the minimum amount. If you don’t, the service provider might cancel the promotional rate of 0% for the money transfer, which would mean that interest would start accruing right away. Your credit report might also reflect the fact that you failed to make a payment.
3. Do not use when withdrawing money from an ATM.
Even with a credit card that charges no fees for money transfers, it is extremely unwise to withdraw cash from an ATM using a credit card.
Withdrawals of cash are handled in a different manner than wire transfers, so the interest rate on cash withdrawals is typically higher. Because your 0% interest period for money transfers will no longer apply, you will immediately be subject to interest charges on these transactions.
4. Formulate a strategy to repay the debt before the accrual of interest begins.
Make sure that you have a strategy for paying off your balance before the introductory period of 0% interest expires and you are required to begin paying interest on the balance.