Credit cards have evolved and become a basic necessity in today’s world. When unforeseen financial emergencies arise, credit cards emerge as saviours, acting as a valuable lifeline. Nevertheless, certain circumstances arise where the use of credit cards for transactions is limited, such as when dealing with obligations in the stock market or conducting transactions like money orders.
In such instances, an effective solution is to transfer funds from your credit card to your bank account. This financial transaction, generally termed a “Balance Transfer,” offers a practical means of managing these specific scenarios, bridging the gap between credit card functionality and the necessities of financial transactions.
Advantages of Credit Card to Bank Account Transfer
Let’s have a look at the key advantages of credit card to bank transfer:
- Shift to a better credit card
With a balance transfer you get access to a better credit card, where you can get a lower rate of interest, better perks and lower APR (Annual Percentage Rate).
- Earn rewards and bonuses
Many balance transfer cards offer reward points and cashback on a transfer from your credit card to your bank account. In many cases, credit cards offer benefits such as waiver of annual charges, competitive credit rates, etc.
- Save money on interest
Several credit cards come with the lucrative 0% APR. It is a significant reason for transferring funds from a credit card to a bank account. This interest rate usually remains constant for 6-21 months. A real-time example would be a person with a high outgoing balance to be paid on a card with an APR of 23%. It will help him if he can come down to an APR of 13%.
- Faster repaying off debt
With no interest factor to be factored in, you can pay off the amount sooner and on your way to becoming debt free. Make sure you know the duration of the interest-free period before you make the transfer so that you can account for the same.
- Consolidating your debt
Owning and using multiple credit cards is normal nowadays. But it also means juggling different credit card EMIs and their due dates. Transferring the debt to a single card and account with lower APRs and better terms makes it more convenient. The cardholder saves on interest, avoids late charges and has a more accessible and hassle-free payment duration if the debt is transferred to a single bank account.
Avoid Penalties and Late Fees
All delayed and missed credit card payments can lead to penalties, late charges and rising interest rates. The good news, however, is that it is possible to avoid these late fees and penalties by following a few tips.
- Find a banking partner that does not charge a fee for a transfer from your credit card to your bank account. If you transfer and pay back in the stipulated time, there are no charges for your balance transfer transaction and the pay-off afterwards.
- Be punctual with your payment schedule: Be mindful of the due date. Making a delayed payment or having a returned payment results in discontinuing the original borrowing terms. It may include a lower rate of interest. As a result, all payable amounts accrue interest at the regular APR of the card. There may also be a late or interest surcharge for delayed payments.
- Keep track of your debt: Be mindful of the credit card bills, the amounts due and their due dates. If you have multiple credit card EMIs, then prioritise the payments. Make sure to pay the minimum payable amounts to help you avoid late payment fees.
- Stay in touch with your card provider: If you miss a credit card payment due to an emergency, keep your card provider informed. They may help you work out a new payment plan and even forego the late fees or interest for a limited time.
Conclusion
Incorporating credit card to bank account transfers into your financial strategy can enhance control. Prioritise timely repayments, exploit low-cost options, and track transactions vigilantly for a healthy financial future.
