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Money Transfer Credit Cards – Interest Free Money Loans

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Money transfer credit cards allow you to borrow with a credit card and transfer money to your bank account. You will need to repay the loan to your credit card.

What are money transfer cards?

Money transfer cards are a type of credit card that allows you to transfer your credit to your checking account. You can then withdraw that money to spend it.

To transfer money from your credit card, you will need to pay an upfront transfer fee which will typically be around 2-4% of the total amount transferred.

Money transfer credit cards often include a 0% interest period during which you can avoid paying interest charges on your debts for several months. This is very similar to a balance transfer card except that you can transfer money instead of credit.

You will need to meet the minimum monthly payments on the money transfer card to keep the 0% interest, and it is generally wise to pay off all of the debt before the 0% period expires.

Cash advance vs money transfer

Most credit cards allow you to withdraw money from an ATM machine, which is usually called a cash advance. So how is a money transfer card different from a standard credit card?

With a standard credit card, cash advances usually incur additional fees and a higher interest rate than the standard purchase. It would also be very unusual to get a 0% interest period with a cash advance.

Withdrawing money from a standard credit card via a cash advance is usually a very expensive way to borrow money, but with a money transfer card there is only a one-time fee for transfer a balance to your checking account and subsequent cash withdrawals will not. be charged.

Are money transfer cards the best way to borrow money?

Depending on how much you borrow, a money transfer card might be one of the cheapest ways to borrow money.

For example, if you borrowed £ 3,000 from a 36 month 0% money transfer card with a 2.5% transfer fee, it would cost you £ 75 up front and then nothing for the next 3 years.

Your minimum monthly repayments would likely be in the range of £ 30 (whichever is £ 25 or 1% of the remaining balance), but should be at least £ 83.33 if you want to settle the balance without paying any interests.

If you borrowed £ 3,000 with a loan with an APR of 3.5% and a term of 36 months it would cost you £ 3,164.62 in total, your monthly repayments would be set at £ 87.91.

So with a money transfer credit card you could have avoided £ 164.62 in interest charges, provided you had paid off the entire balance before the 0% period expired.

Is a loan a better option for borrowing money?

If you want to borrow larger sums of money, or repay over a longer period, a loan may be more suitable than a money transfer card.

With loans, the price is fixed for the entire repayment term, which means you can see exactly how much a loan will cost you up front. This can make loans easier to compare than credit cards on the basis of cost.

However, loans are less flexible than credit cards. Your monthly payments are fixed and you must respect them all in order to avoid any default.

It is also unusual to see some form of 0% interest period on a loan, so there is no way to avoid interest charges. But, the best loan rates are often much lower than typical credit card rates (i.e. 3-4% vs. 15-20%).

Is an overdraft a better way to borrow money?

An overdraft is where your bank will allow you to continue withdrawing money or spending with your debit card, and take your checking account balance in negative values.

There is a big difference between an arranged overdraft and an unordered overdraft.

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An authorized or arranged overdraft is when your bank allows you to spend more money than you have in your account. This is usually capped at a limit, normally between £ 500 and £ 2,000. Normally, you will have to pay an interest rate or a daily fee, although it is possible to get a bank account that offers an interest-free overdraft.

Unauthorized discovery

You will have an unauthorized overdraft when you spend more money than you have deposited into your account without your bank’s authorization. They will charge you a fee and charge a higher interest rate or daily fee for doing this.

So if you have an authorized interest-free overdraft and don’t need to borrow more than your overdraft limit, an overdraft is usually the cheapest and easiest way to borrow money. .