Credit cards are arguably the most versatile financial tools you can have, provided you use them wisely. A credit card is your pre-approved short-term line of credit which adds to your purchasing power. Apart from the lucrative rewards, discounts, and cashbacks, the actual worth of credit cards is realized in times of financial crunch and meeting unexpected expenses. However, certain transactions are there that cannot be completed through credit cards. For instance, payments of EMIs, money orders, and a range of expenses can only be met in cash. In such cases, you can always transfer money from credit card to bank account. Moreover, in case of emergencies, it’s the fastest way to avail of liquid cash.
But before that let’s learn a bit more about online money transfer.
What is Online Money Transfer?
Online money transfer has converged the conventional system of money transfer involving physical transfer of money or instruments to electronic transfer of money involving a mere exchange of data. Funds are transferred between two bank accounts electronically without any movement of funds. There is no need to visit your bank to make an online transfer; modes like net banking and UPI payments provide a secured web-based service that can be used to transfer money online.
Is it Legal to Transfer Money from a Credit Card to a Bank Account?
Though credit cards are meant for meeting your purchase obligations, there is no such restriction or question of illegality on transferring funds from a credit card to your bank account. You can route money transfers from credit card to bank accounts through e-wallets like Paytm, money transfer services like MoneyGram, cheques, net banking, etc., provided you comply with the ceiling limit of your card.
How to Transfer Money from Credit Card to Bank Account using E-wallets?
E-wallets act as a bridge between the credit card and the bank. The money comes from the credit card to the e-wallet and is transferred to the bank account, leaving no trail that connects the credit card and your bank account directly.
Let’s understand through a step-by-step process:
Step 1: Register on the e-wallet.
Step 2: Complete the KYC process by providing your credentials and supporting documents.
Step 3: Once the KYC is approved, transfer money to your e-wallet from the credit card. Since e-wallets allow adding money into your wallet, this process won’t be an issue.
Step 4: Once the transfer is successful, look for
- “Passbook” on the e-wallet app or website.
- In the “Passbook,” you will find the “Send money to bank account “option. Select that option.
- Enter the amount you want to transfer and send money directly to your bank account.
Though money from credit cards can be routed to your bank accounts using e-wallets, the e-wallets might charge you a small transaction fee, and different wallets may have different transaction fees.
Steps to Transfer Money from Credit Card to Bank Account via Money Transfer Services
These services essentially facilitate the transfer of funds where a direct transfer is impossible. Some examples are MoneyGram, Western Union, Wise, Remitly, etc.
The following steps describe the way to transfer money by credit card to bank account using money transfer services:
Step 1: Login to your money transfer service account or register if you don’t have an account.
Step 2: In the next step, you’ll be asked to enter the “Country” of the recipient. Since you are transferring money to your bank account, enter your country as India and proceed.
Step 3: Provide details like your bank account number, full name, etc., as asked by the money transfer service.
Step 4: Select ‘credit card’ as the payment method and add the amount you want to transfer.
Step 5: Now proceed to transfer funds.
Step 6: It might take 1-5 days for funds to reflect into your bank account; thus, be patient.
Note: The money transfer services might charge you some transaction fees.
Other Credit Card to Bank Money Transfer Options
Here are a few other options you could explore to transfer your money:
- “Cheque to self” can be drawn to instruct your bank to transfer funds from credit card to bank account. However, this transaction will take a couple of days to reflect.
- A NEFT or RTGS form could also be submitted to your bank, instructing them to debit your credit card account and credit the proceeds in your bank account.
- Another way is to simply withdraw the amount from your credit card using an ATM facility and deposit the same into your bank account by paying a visit to your nearest branch. However, cash withdrawal from credit cards is subject to a considerable transaction fee.
To make payments or meet expenses that cannot be met directly via a credit card or to save additional charges you might have to bear if you use a credit card, you can transfer money from your credit card to your bank account. However, this shouldn’t be made a practice because the motive behind issuing credit cards is to provide you with a short-term line of credit and not to supplement cash in your bank account.
Frequently transferring funds from credit cards to bank accounts might attract the attention of credit card issuing institutions and the income tax department. Nevertheless, using funds transferred from credit cards is cheaper than using personal loans from banks or swiping credit cards for cash withdrawals, which have high transaction costs.
Thus, based on suitability, choose the mode to transfer money from your credit card to your bank account. But remember, you need to pay your credit card dues, so be financially prepared to meet your credit card liability at the end of the billing cycle.
FAQs on Transferring Money from Credit Card to Bank
Q1. Is it possible to transfer money from a credit card to a bank account?
Ans: Yes, you can transfer money from a credit card to a bank account, and no regulation expressly calls it an offense. Thus, you can transfer money from your credit card to your bank account. to make payments that cannot be made directly using credit cards like mortgage payments, money orders, etc
Q2. What are the modes through which I can transfer money online from a credit card to a bank account?
Ans: You can use e-wallets, money transfer services like MoneyGram, or banking facilities like net banking, RTGS, NEFT, cheque-to-self etc., to transfer funds. However you can only transfer funds from your credit card to your bank account subject to the ceiling limit of your credit card.
Q3. Is it possible to add money to your bank account via Paytm wallet?
Ans: Provided your KYC is complete, you can use Paytm wallet to transfer money from your credit card to your bank account. You must first add funds to your Paytm wallet from your credit card, and then send this money to your bank account using the’ send money to bank account’ feature provided by Paytm.
Q4. Is it free to transfer money from a credit card to a bank account?
Ans: No, you will have to pay a certain fee. The e-wallets and the money transfer services charge a transaction fee each time you transfer money via them, and these fees vary from provider to provider. Moreover, if you transfer money using net banking, RTGS, and NEFT, the credit card issuing institution will charge you a higher transaction cost. Thus be advised to transfer money from a credit card to a bank account when absolutely necessary.
Q5. Is it safe to transfer money from credit cards to bank accounts?
Ans: Yes, all the methods that we discussed above are legal, there are no restrictions on transferring money from credit cards to bank accounts.