What happens when you transfer money from credit card to debit card?

Transferring Funds from Credit Card to Debit Card: Understand the Potential Costs

When faced with a financial shortfall, it’s tempting to consider transferring funds from a credit card to a debit card. However, it’s crucial to be aware of the potential costs associated with this transaction.

Unlike debit card transactions, which typically don’t incur fees, credit card transfers to debit cards generally trigger additional charges. These charges can include:

• Daily interest: Credit cards charge interest on outstanding balances, including any amount transferred to a debit card. This interest accrues daily, increasing the overall cost of the transfer.

• Balance transfer fees: Some credit cards impose a fee for balance transfers, which can be a percentage of the amount transferred.

• Cash advance fees: Transferring funds from a credit card to a debit card may be considered a cash advance by the credit card issuer. In this case, you could incur a cash advance fee, which is typically higher than a balance transfer fee.

Why Debit Card Transfers May Not Be the Best Option

Given the potential costs involved, transferring funds from a credit card to a debit card can be a less financially prudent option compared to other alternatives.

For instance, if you need immediate access to funds, you could consider:

• Personal loan: A personal loan provides a lump sum of cash that you can repay over time with fixed monthly payments.

• Home equity loan or line of credit: These options allow you to borrow against the equity in your home, potentially at lower interest rates than credit cards.

Conclusion

While transferring funds from a credit card to a debit card may seem like a convenient way to access cash, it’s essential to carefully consider the associated costs. Daily interest, balance transfer fees, and cash advance fees can significantly increase the overall cost of the transaction. For a less expensive solution, explore alternative financing options such as personal loans or home equity loans.