There are a number of different ways to transfer money overseas and using a credit card is just one option to consider. Choosing to send money with credit card can certainly have its advantages, but there are some disadvantages and things to consider before you opt for this payment method, too. In this guide, we’ll provide a full breakdown of everything you need to know about using your credit card for money transfers.
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There are several ways in which you can use your credit card to send money overseas: the two most prevalent are through banks and using online money transfer services. Before you send money by credit card, it’s always important to compare your options to guarantee you’re getting the very best deal.
Banks
One way you can send money abroad using your credit card is with your bank. Usually, this can be done using your online banking app, by phoning your bank or visiting your local branch.
When you do this, it is likely that your credit card provider will treat this money transfer as cash in advance (we will explain this in the next section) and not as a credit charge, which often results in higher interest rates than usual, as well as the typical international bank transfer fees charged by your bank.
One of the most popular options for send money internationally are specialist money transfer providers, who can offer more convenient and cost-effective ways of sending money anywhere in the world.
Many of these companies let you find your transfer through a credit card, as well as other typical payment options such as debit card and bank transfer. You can easily link your credit card to your money transfer account and send payments when you need to, often within minutes from your mobile app as opposed to a number of business days. In many cases this can be sent to cash pickup locations and into a recipients bank account.
Banks vs Money Transfer Providers for Credit Card Payments:
If you are making a transfer using your bank, you will first need to transfer the funds into your account. For this, you will have to request a cash advance, wherein the funds will be moved into your checking account or you will have to withdraw cash and deposit the money into your account. When you are using money transfer services, this process happens automatically as you follow steps to complete the transaction.
When should you use credit cards for sending money abroad?
Send money by credit card is secure and convenient. Also, as we’ll explore below, sending money from credit cards is often an expensive way of transferring money abroad, so it is generally wise to use this payment method sparingly. However, it makes sense to use your credit card when funding international transfers for the following reasons:
Reward points/cashback: If your card provider offers favourable cashback options or other rewards you may want to use it for funding international transfers. Make sure the high fees you are likely to be charged do not offset the benefits you are expecting in terms of cashback or reward points.
Emergency situations: In situations where you need to send money to someone urgently, but you do not have enough cash in your bank account, or you don’t have your account details handy, the quickest way to transfer money is by using your credit card.
Sending money from credit card to credit card
Sending money from card to card is a less popular way of transferring money, and not always the best option.
It’s more popular to pay by credit card and send money to a bank account, from which the funds will then be transferred to your card balance or used directly with the bank account's associated card. We’ve covered this in more detail in our guide on making card-to-card transfers.
Pros and cons of sending money with a credit card
As with any payment method, there are advantages and drawbacks to sending money with a credit card. Here’s a quick summary of the pros and cons:
Pros
Reward programs: You may benefit from a reward program like frequent flyer miles, cashback or reward points.
Useful in emergencies: Credit cards are helpful in an emergency when you have no other way of funding the transfer, or when other methods are taking too long.
Convenience: Using credit cards for money transfers is convenient because you don’t have to move your money around to make the transfer as the process is done using credit.
Security: Credit cards are a secure way to send funds overseas. Most credit cards come with fraud protection and other security features that make them very safe for international money transfers.
Cons
High exchange rate margins: You’ll often pay high interest rates on cash advances which is levied from the day you send the money.
Not accepted everywhere: Not all money transfer providers accept credit cards as a mode of payment.
Hidden fees: There are other fees and charges involved when you choose to send money using credit card.
How much does it cost to send money overseas using your credit card?
Sending money overseas using your credit card may not be the cheapest option. There are lots of fees involved and you may not get the best exchange rates.
Remember, if you use a credit card to fund an overseas money transfer, you are borrowing money to make the transfer. So, you will have to pay a high interest rate and the fees will be added to your balance, which will increase the total interest amount. Some of the costs involved in sending money from credit cards include:
Cash advance fees
Cash advance fees are services offered by credit card providers that allows users to borrow or withdraw cash up to a certain limit. When you choose to use your credit card for sending money overseas, you must understand you are not using your credit, but borrowing funds from your credit card provider. It is similar to getting a short term loan which needs to be repaid within the billing cycle.
One of the most common fees associated with credit card funded money transfers is the cash advance fee. It is a fixed amount or a percentage of the amount you are transferring from your credit card account.The percentage fee is often charged with minimums of $10 or more. Therefore, if your bank/provider charges a 3% cash advance fee and you intend to transfer $100 from your credit card, you will pay $10 (the minimum amount you have to pay) and not $3.
Interest charges
Most credit card companies charge a higher annual percentage rate (APR) for cash advances compared to the interest rate charged on balances that come from purchases. Moreover, interest begins accruing as soon as you initiate the transaction. You may have to pay at least 25% APR.
Currency conversion fee
Credit card companies are not known to offer the best exchange rates. In addition to this, currency conversion fees are often quite high so you could end paying a lot just for currency conversion, which can substantially increase the total transfer costs. The currency conversion fee typically ranges from 1% - 3% of the transaction amount.
Save money on international money transfers:
Most forms of international money transfer will have fees and charges, but you can reduce the overall cost of your transfer depending on the payment method you select. It's worth considering a bank transfer or debit card payment, if this proves more cost-effective.
Possible impact on your credit score when using a credit card for international transfers
It is important to note that using a credit card for larger transactions can also affect your credit score. When you take a large cash advance, you may end up exhausting your credit limit. A poor credit score can make it harder for you to get other loans such as a vehicle loan or a home loan.
If you are using a credit card to make an overseas money transfer, try to pay it off as soon as you can in order to avoid charges increasing or any damage to your credit score.
What are the alternatives to using credit cards for sending money overseas?
Credit cards can be a convenient way to send money abroad, but there are other ways to save money, including:
Bank transfer: You can make international bank transfers from your bank account. Banks provide multiple ways to transfer funds, but you need to pay for them regardless of the method you choose. The downside with bank transfers is that they tend to attract higher fees compared to other payment services. This means bank transfers are convenient and safe but not always the most cost-effective.
Debit card: You can use your debit card for sending money the same way you would use a credit card, routing your transaction via bank or money transfer provider. However, a debit card transfer is not as expensive as a credit card transfer because you do not have to pay the cash advance fee and other fees that come with using a credit card.
Money transfer services: There are specialised online payment services that let you transfer funds to any part of the world conveniently and at very competitive rates. They offer a variety of ways to fund your transaction, including bank transfer, debit card or e-wallet, depending on the service you choose. Many will also allow you to use your credit card as a payment method, which can be advantageous for the reasons summarised below. These services often charge minimal transfer fees and lower exchange rate margins than other payment options. We've put together a list of top 10 money transfer companies to get you started.
Sending money overseas from your credit card is a great option if you are looking for convenience and security. You can transfer money instantly even if you don’t have enough cash in your account. You can also enjoy other benefits such as cashback and frequent flyer points.
However, using credit cards for international money transfers can prove quite expensive because it involves high fees and interest rates. If you’re looking to save money, it is a good idea to look into using alternative methods such as bank transfer or debit cards. This can help you find the best possible deal while ensuring the maximum amount of money reaches your intended recipient.
When deciding to transfer money using your credit card, it is best to route your transfer through a money transfer service rather than a bank. While you will still pay the fees to the credit card provider, you can save on the transfer costs and get better exchange rates.
Before making any international transfer, make sure to use our quick and easy comparison tool to find the most convenient and cost-effective payment method for you. It’s always important to compare your options to guarantee you’re getting the very best deal.
FAQs
How much does it cost to send money using a credit card?
It depends on the credit card company and their fees for money transfers. Some credit cards may charge a flat fee or a percentage of the transfer amount. It is important to check with your credit card company before initiating a money transfer so that you are aware of any potential fees. Additionally, the recipient may also be charged a fee by their bank for receiving the funds.
It is important to note that while credit cards can be a convenient way to send money, they may also have higher fees compared to other options such as bank transfers or online payment services. It is helpful to compare the costs and benefits of various methods before sending money.
Overall, it is important to carefully consider the potential fees and choose the option that best fits your needs. Properly researching and evaluating options can help ensure a smooth and cost-effective money transfer process.
Is sending money with a credit card the best option?
It depends on the situation. While it may be convenient, there are often fees associated with using a credit card for money transfers. Additionally, because a credit card is a form of borrowed money, sending funds with a credit card could potentially lead to added debt.
Before deciding on using a credit card for sending money, consider alternative options such as using a debit card, electronic bank transfer, or money transfer providers. Each option may have its own advantages and disadvantages, so it's important to weigh them before making a decision. Ultimately, the best choice for sending money will vary depending on the specific circumstances.
Can you send money internationally using a credit card?
The answer is yes, but it may not always be the best option.
While some credit card companies allow for international money transfers, they often charge high fees and a foreign transaction fee on top of that.
Additionally, the exchange rate offered by credit card companies is often not as favorable as other options.
Before using a credit card to send money internationally, it is important to compare the fees and exchange rates with other options such as a bank transfer or online money transfer service.
In some cases, using a credit card for an international money transfer may be convenient and quick, but do your research to ensure you are getting the best deal possible.
Are exchange rates when sending money with a credit card competitive?
This can depend on the credit card company and their partnerships with banks or exchange companies. It is important to do research and compare rates before choosing a method of sending money with a credit card. Additionally, there may be fees associated with using a credit card for international transactions, so be sure to factor those in when comparing options.
Ultimately, it is possible to find competitive rates when sending money with a credit card, but it may take some research and comparison.
Can you transfer money from a credit card to a bank account?
The answer is yes, and it can be done in a few different ways.
One option is to do a cash advance from your credit card, which allows you to withdraw money from an ATM or bank teller using your credit card. However, this typically comes with steep fees and high interest rates, so it should only be used as a last resort.
Another option is to use a service like PayPal or Venmo, which allows you to easily transfer funds from your linked credit card to another person's bank account. Just be sure to check for any associated fees before proceeding with the transfer.
Sending money with a credit card may not always be the most cost-effective option, so be sure to weigh your choices carefully before deciding on the best method for you.
What is the quickest way to send money via a credit card?
The easiest and quickest method is to use a peer-to-peer payment app such as Venmo or PayPal. All you need is the recipient's email address or phone number, and you can transfer funds almost instantly. Another option is to make a cash advance from your credit card, but be aware that this usually incurs high fees and interest charges . It is also important to remember that sending money with a credit card is not the same as making a purchase. Your credit card company may charge additional fees for this transaction, so be sure to check with them before proceeding. Additionally, always exercise caution when sending money online and make sure you trust the recipient before sending funds.
Is sending money with a credit card safe?
This is a question many people have when considering using their credit card to send money.
The good news is that, as long as you are careful and vigilant about protecting your personal information, sending money with a credit card can be just as safe as any other method.
One way to ensure safety is by only using reputable and trusted sources, such as a well-known payment platform or your credit card's own money transfer service.
You should also make sure the recipient is someone you know and trust, and double-check all information before finalizing any transaction.
Additionally, it's important to regularly monitor your credit card statements for any unusual or unauthorized activity.
Is it cheaper to send money with a money transfer provider than it is to send with a credit card?
It really depends on the specific provider and the amount of money being sent. Generally, using a credit card to send money overseas can be more expensive due to foreign transaction fees and currency conversion charges. However, some credit cards offer low or no fees for international money transfers, making them a competitive option. It's important to compare rates and fees before choosing a method to send money. Additionally, using a credit card may offer added convenience and security for the sender.
Overall, it's important to do your research and compare options before sending money internationally. Consider all fees, exchange rates, and convenience factors in order to choose the best option for you.
Will sending money with a credit card impact my credit score?
The short answer is, it depends. If you are using your credit card to make a purchase and then paying off the balance in full and on time, it should not have a negative impact on your credit score. However, if you are using your credit card to withdraw cash or make a payment that you cannot pay off in full, it could have a negative impact on your credit score due to increased utilization and potentially missed or late payments. It is always best to use a debit card or other means of payment for cash withdrawals, and to make sure you can pay off any credit card purchases in full and on time.
Are currency conversion fees higher when sending money with a credit card?
In general, yes. Credit card companies often charge a currency conversion fee for international transactions, which can range from 1-3% of the transaction amount. However, this varies by credit card provider. It is important to carefully review the terms and fees associated with your specific credit card before making an international money transfer. Additionally, some providers offer credit cards with no foreign transaction fees, which can be a better option for frequent international travelers or those making regular international payments.
It is also important to compare rates and fees with other methods of sending money internationally, such as through a bank transfer or online money transfer service. These options may sometimes have lower fees and better exchange rates. Ultimately, it is important to carefully consider all options and choose the method that is most cost-effective for your specific situation.
Article Factchecked by Elliot Laybourne on 20th July 2022.
Elliott is a former investment banker with a 20 year career in the city of London.
During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making.
During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others.
Jonathan is the founder and editor of MoneyTransfers.com. Jonathan is highly experienced in the currency transfer market, having previously worked in the FX trading industry, alongside being an avid traveller. Using his knowledge he identified a need for transparency and further education to help people save money on their money transfers, leading to the creation of MoneyTransfers.com
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