Transferring funds from a credit card to a bank account, a practice called a credit card cash advance, is convenient for liquidity but financial experts warn that it has higher costs and impacts credit scores.

“Think twice before treating your credit card like a bank account. Transferring funds comes with hefty fees and sky-high interest rates, potentially damaging your credit score.  It is a slippery slope towards debt. Explore alternatives like personal loans or, better yet, create a budget and prioritise saving,” said   Prashant Kumar chief executive officer at Kredit.pe.

Some lenders allow the service at their net banking platforms.

Log in to your bank's net banking portal.

Go to the credit card or funds transfer section.

Select the option for transferring funds from your credit card.

Enter the amount and your bank account details.

Confirm the transaction.

Use an e-wallet as an intermediary for transferring money

Register and load the e-wallet using your credit card.

Open the e-wallet app and go to the ‘Passbook’ or similar option.

Select ‘send money to bank” or the similar option.

Enter the required details:

Transfer amount

Beneficiary’s account number

IFSC code

Confirm the transaction.

ATMs allow you to access cash advances using your credit card. Enter your credit card PIN at the ATM, select the cash advance option, and withdraw the desired amount. Cash advances often come with higher fees and interest rates compared to regular credit card transactions.

 

Fill out the cheque

Write your name in the ‘payee’ section as 'Self'.

Enter the amount you want to transfer.

Add the date and sign the cheque, ensuring all details are correct.

Visit your bank branch and deposit the cheque into your bank account as you would a regular cheque.

Once processed, the amount will be debited from your credit card limit and credited to your bank account.

The charges for transferring funds from a credit card to a bank account can vary based on the method and the bank involved. Certain methods may incur a flat fee or a percentage of the transaction amount, while others might apply additional charges for international transfers.

Risks involved

While transferring money from a credit card can be convenient, there are some risks:

Debt accumulation: Using credit cards irresponsibly can lead to significant debt due to high-interest rates.

Impact on credit score: Frequent cash advances or high utilisation of available credit can negatively affect one’s credit score.