Money Transfer Credit Cards: How They Work and When to Use One
A money transfer credit card lets you move money from your credit card straight into your bank account, often at 0% interest for a set period, in return for a fee. People use them to clear an overdraft or pay off a more expensive debt.
They can be useful, but they're a form of borrowing like any other. Here's how they work.
Key takeaways
- A money transfer moves credit into your current account, usually for a one-off fee.
- Many offer a 0% period, then the standard rate applies.
- Fees are usually higher than balance transfer fees. MoneyHelper notes money transfers are usually more expensive.
- They can make sense for clearing an expensive overdraft with a clear repayment plan.
- Not a good idea for everyday spending or if you're already struggling with debt.
This is general information, not financial advice.
How does a money transfer work?
- You're accepted for a card offering a money transfer deal.
- You ask the provider to send an amount to your UK current account.
- A money transfer fee, a percentage of the amount, is added to your card balance.
- The transferred amount is charged at the promotional rate (often 0%) for a set period, then the standard rate.
Money transfers usually need to be made within a set window after opening the account to get the promotional rate.
Money transfer vs balance transfer
| Money transfer | Balance transfer | |
|---|---|---|
| Moves money to | Your bank account | Another credit or store card |
| Typical use | Clear an overdraft, pay a bill or another loan | Clear existing card debt |
| Fee | Usually higher | Usually lower, sometimes none |
| Availability | Fewer cards offer it | Widely available |
If your debt is on another credit card, a balance transfer is usually cheaper. See How Do Balance Transfers Work? A Plain-English UK Guide and Balance transfer credit cards.
When can a money transfer make sense?
- Clearing an expensive overdraft. Arranged overdraft rates can be high, so moving the debt to a 0% deal, even with a fee, can reduce the cost if you repay within the period.
- Paying off a costly debt that can't be balance-transferred.
- Spreading a necessary cost that can't be paid by card, with a clear plan to repay.
It's worth comparing the total cost, including the fee, with alternatives such as a personal loan (see Balance Transfer vs Personal Loan: Which Is Better for Clearing Debt?).
Costs to check
- Money transfer fee. A percentage of the amount transferred, often with a minimum.
- Length of the 0% period and whether you're offered the full advertised period.
- The rate afterwards. What any remaining balance will cost.
- Transfer window. How long you have to make the transfer.
- Limit. You may not get a limit high enough to move the full amount.
Risks to watch
Spending the money twice
If you clear your overdraft and then use it again, you'll end up with two debts instead of one. Consider reducing your overdraft limit once it's cleared.
Running out of 0% time
Divide the total (including the fee) by the number of 0% months and pay at least that each month.
Missing payments
Missing a payment can end the promotional rate and add a late fee and a mark on your credit file. Set up a direct debit.
Persistent debt
If you end up only paying the minimum for a long time, the FCA's persistent debt rules mean your provider will contact you after 18 months if you've paid more in interest and charges than you've repaid of the balance.
Money transfers and your credit score
Applying for a new card leaves a hard search on your file. Experian says most hard searches stay on your report for 12 months. Check your eligibility first with a soft search on eligibility checkers explained.
Using a large share of a new card's limit can affect your credit utilisation, which lenders may consider. Paying it down steadily helps.
Is a money transfer card right for you?
It may suit you if you:
- have a specific, expensive debt to clear
- can repay the full amount within the promotional period
- won't run the original debt back up.
It's probably not right if you're borrowing to cover everyday living costs or already struggling with repayments. In that case, free debt advice through MoneyHelper is a better first step.
A worked example (illustrative only)
Say you have a £1,500 arranged overdraft you've been using every month. You get a card with a 0% money transfer period and a percentage fee, and move £1,500 to your current account.
- The fee is added to your card balance straight away.
- To clear the full balance within the 0% period, divide the new total by the number of 0% months. That's your monthly target.
- Once the overdraft is cleared, consider asking your bank to reduce your overdraft limit so you're not tempted to use it again.
If the fee is less than the overdraft interest you'd have paid over the same time, and you stick to the plan, you've saved money. If you run the overdraft back up, you'll have two debts instead of one.
Questions to ask yourself first
- Why do I need this money, and will the need come back next month?
- Can I afford the monthly target, not just the minimum?
- Would a personal loan with a fixed end date suit me better?
Frequently asked questions
Can I transfer money from a credit card to my bank account?
Yes, with a money transfer credit card or offer. A fee usually applies, and the rate depends on the deal.
Is a money transfer the same as a cash withdrawal?
No. A cash withdrawal at a cash machine is usually charged interest from day one, often at a higher rate. A money transfer offer usually comes with its own promotional rate and fee.
Are money transfers cheaper than overdrafts?
Sometimes. If you clear the debt within a 0% period, the fee may cost less than overdraft interest. Compare the total cost first.
Can I do a money transfer on my existing card?
Some providers make money transfer offers to existing customers. Check your app or contact your provider.
Do money transfers affect my credit score?
The transfer itself isn't recorded as a separate event, but your balance and utilisation will rise. Applying for a new card leaves a hard search.
This is general information, not financial advice. Always check the fee and the rate after any promotional period.
