subject: How to make a money transfer credit card offer work for you [print this page] About six months ago credit card companies started doing something they hadn't done in a while - actually they started doing quite a few things but there is only one that we should be concerned about here and that is allowing users to make a money transfer to a current account.
Why would one want to do such a thing? Well, for three reasons.
As anyone who has done their homework when it comes to credit card comparison know, cash advances made on all credit cards are sinfully, horribly expensive.
Taking money out of an ATM will incur a higher rate of interest which is charged from the moment you hit those buttons on the hole in the wall - in other words, unlike purchases, there's no interest free period - and many cards also charge a hefty fee for every cash advance transaction that's made.
This is usually the greater of a percentage of the transaction or a nice round figure like five pounds.
Needless to say, it can all add up very quickly and become very much more expensive than taking money out with a debit card, even when you're using one of those sneaky cash machines in a club or a newsagents that charges you a couple of quid.
So a money transfer can allow you to get the money you're borrowing on a credit card out in cash.
Second, money transfers are often part of 0% balance transfer credit cards generally the money transfer is of the same length and charged at the same interest rate as this introductory offer.
So, not only are you getting cash out for cheaper with a credit card you're effectively getting the transferred amount at an interest rate of zero percent which is certainly our favourite interest and we're sure it's yours too.
Third, we come to what you'd actually want to use a money transfer credit card for.
Well, apart from getting your hands on some cash interest free in a situation where you can't use a credit card to pay for whatever it is you want to buy a money transfer could be used to pay off an overdraft that's accruing interest or - via the current account to your lender - pay off a loan.
Overdrafts and loans are both examples of borrowing that - like the credit cards that are covered by the balance transfer offer - often attract high interest rates.
By paying these off at 0% you're not gaining anything as such but just avoiding those interest payments that you'd otherwise pay.
Note that if you're looking at bad rating card such as the Capital One Classic you're unlikely to be able to find a credit card that comes complete with a money transfer offer since these are usually only open to those with a good credit rating.
How to make a money transfer credit card offer work for you
