Can you transfer money from your credit card to a savings account?

Can you transfer money from your credit card to a savings account?

If you find yourself in a situation where you need cash in hand, did you know that you can transfer money from your credit card to your savings account? However, this convenience comes with a caveat. 

Since credit cards aren’t meant for cash transfers, you might be required to pay a fee and could be charged high interest rates for such a transaction. It’s worth considering other options first, and only when all else fails, thinking about making a transfer from your credit card to your savings account. 

Read on to know how to transfer money from your credit card to your savings account.

Here’s how you can transfer money from a credit card to a savings account

Before you get ready to make the transfer, check with your credit card provider and bank if such a transfer is permitted. You can either call them or log into your account and look for an option there. 

Once you confirm that your card and selected account allow this, you can make the transfer online through the bank’s mobile app, or over the phone. The basic steps for each of the options are covered below, but there could be slight variations from one provider to another.

  • Steps to make the transfer over the phone
  • Call your credit card provider and verify your account.
  • Request to transfer to a bank account.
  • Confirm the amount that you wish to transfer to the bank account.
  • Provide your bank account number, BSB and any other required details.
  • Follow the prompts to complete the transaction.

Steps to make the transfer online and with mobile banking:

  1. Log in to your credit card account.
  2. Choose the ‘Transfer’ option.
  3. Key in the amount that you wish to transfer.
  4. Enter your bank account number, BSB and any other details mentioned on the form.
  5. Follow the steps to complete the transaction.

If your credit card and savings account are with the same bank, the funds might be available to you within a day. If the transfer is to an account with a different banking institution, you might be required to wait for 2-3 business days for the transaction to be completed.

Things to consider before you transfer from your credit card to a savings account

Since a credit card isn’t meant to support cash transfers, you might have to pay fees and incur higher interest rates. Make sure you factor these in along with other potential costs before you go ahead with this transaction.

  • Transaction fees: Even if the transfer is not considered as a cash advance transaction, a transaction fee may apply. Moreover, there could be additional fees if your transaction is declined.
  • Cash advance fee: A transfer from the credit card to a savings account is usually considered a cash advance transaction, and you'll typically pay a fee worth around 3% of the transfer amount.
  • Cash advance interest rate: Additionally, your transfer might also be charged interest at the cash advance rate, which is usually higher than the typical credit card purchase rate.
  • International transfers: If you’re transferring funds from your credit card to an overseas account, and if the transfer is allowed, you might need to pay an international transaction fee as well.
  • No interest-free days: Your transfer will not be eligible for interest-free days, and that means you'll be charged interest straight away.

What if your bank or credit card refuses the transfer?

There is a possibility that your bank or credit card could decline the transaction. In this case, you can consider the following alternatives to transferring from your credit card to a savings account:

  • Use an ATM cash advance: You could withdraw cash from an ATM using your credit card and then deposit the money directly into the bank account. Remember, cash advance rates and fees will apply.
  • Apply for a personal loan: If you're in a pinch and need money in an emergency, you might want to take a personal loan instead of a credit card cash advance. In the medium to long term, these loans are often less expensive than a credit card cash advance.
  • Make an international transfer: If you wish to send funds to an overseas account, you might be better off using an international transfer service. Please note that these services accept payment only through an Electronic Funds Transfer (EFT), so paying with your credit card might not be an option.

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Fact Checked -

This article was reviewed by Kate Cowling before it was published as part of RateCity's Fact Check process.

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A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

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Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Do banks run credit checks on savings accounts?

When you apply to open a new savings account, some providers may conduct a credit check, meaning that they will ask a credit bureau for your credit history. This isn’t always the case on savings accounts though and depends on the provider, as you aren’t borrowing money. 

As you are opening a savings account and not borrowing funds, this credit check is considered a soft inquiry and should not affect your credit score. If the bank has run the credit check, you can often still open a savings account even if you have a poor score, provided you meet other requirements. 

What are the requirements of an ING Bank locked savings account?

An ING bank locked savings account - also called a term deposit - offers you interest in exchange for holding your money for a period of time.

The terms offered include as little as 90 days or as long as two years. Generally, the longer you lock your money away, the higher the rate of interest. 

The minimum deposit amount for an ING locked savings account is $10,000. 

To be eligible to apply, you must: 

  • Be an Australian resident for tax purposes
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Do I have to claim interest on my savings account?

When you lodge your income tax returns, you must include in the documentation all your sources of income, including bank interest. Your bank will report any interest you earn on the funds in your savings account to the Australian Tax Office (ATO). When the ATO then compares this information with your tax returns,  you also need to have mentioned the interest earned. If there is any discrepancy, you’ll receive a letter from the ATO. 

Avoid this situation by ensuring you receive your bank statement with interest noted. Then declare the interest in your tax returns and pay the tax that’s applicable based on the income tax rate.

You only need to claim your share of the interest earned for joint accounts. If you manage an account for your child and receive or spend money via this account, you will also need to report any interest earned from said account.

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A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can you direct deposit to a savings account?

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How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

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How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

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Who has the highest interest rates for savings accounts?

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