Although you can send money with a credit card, there are certain downsides and risks, such as fees and security considerations.
Let’s review the different methods for sending money via credit card, as well as important things to consider before deciding to use your credit card for a money transfer.
Common methods for sending money with a credit card
To send money with a credit card, you’ll first need to select a method to do so. The method you choose will typically depend on the transaction type and the recipient.
Peer-to-peer payment platforms
Peer-to-peer payment platforms are electronic services that allow users to exchange funds digitally using bank accounts, debit cards or credit cards. While the policy for credit card usage varies by platform, PayPal, Venmo and Cash App are common P2P platforms that allow you to use a credit card for personal payments. However, remember that each of these services may only accept credit cards from select issuers, and they will typically charge a fee for transferring funds.
If you need to send money internationally, Western Union and MoneyGram are P2P payment options that allow you to transfer money internationally with a credit card. Once again, note that transfer fees and exchange rates may be applied when using these two platforms.
Wire transfers
Some banks may also allow you to fund wire transfers with a credit card. However, the money transferred in a wire transfer via credit card may be considered a cash advance by the credit card issuer. In this case, additional cash advance fees may be incurred for the sender of the money transfer. A cash advance may also have a higher interest rate on your credit card.
Steps to send money using a credit card
Here are three necessary steps to send money using your credit card.
Choose a platform
Select a platform that best fits your needs. Consider whether you’re sending money domestically or internationally and what platforms may be available to your recipient. For example, if you want to send someone money using Venmo, the recipient will also need a Venmo account.
Link your credit card
Next, you will need to link your credit card to the platform. This requires your credit card number, its expiration date and its CSV number.
Complete the transaction
Lastly, to complete the transaction, you must initiate the money transfer on the platform and add the recipient’s details, such as their name, phone number or email address. Usually, the money transfer platform will ask you to confirm the transaction details before officially sending the money.
During this step, check all the information you’ve provided to help ensure a successful transaction. It may also be a good idea to confirm with your recipient that they received the money transfer.
Fees and costs involved
Common fees for sending money with a credit card could include:
Transaction fees
Some platforms may charge a fee for sending money. Transaction fees can be either flat fees (i.e., a fixed additional charge for each transaction) or a percentage charge on the total payment. Research the fees associated with the platform beforehand so you can be prepared to pay them.
Fees for international transfers
An international transfer occurs when you send money to someone who resides in a different country than you. If you send money to an international recipient, the platform may charge a higher fee for international transfers International transfer fees vary by platform and may include exchange rates if the country uses a different currency.
Cash advance fees
A cash advance fee may be charged if the money transfer is considered a cash advance by the issuer. It is important to know whether your credit card issuer will consider using your credit card for money transfers as a cash advance because there may be a different APR associated with the cash advance amount owed on your credit card.
Risks and considerations
It’s important to know and understand the risks associated with using a credit card for money transfers, such as:
Accruing interest
Using a credit card to send money can lead to interest charges, which means you may spend more money in the long term. To avoid this, pay off any balance on your credit card as soon as possible or before the statement balance due date.
Impact on creditworthiness
If you send money with a credit card without paying your balance off in full, it could increase your credit utilization, impacting your creditworthiness. This may negatively affect your credit.
Security concerns
When sending money with a credit card, take the necessary precautions to avoid scams and ensure safe transfers. Always confirm the details of the recipient you’re sending money to.
Alternatives to sending money with a credit card
If the risks associated with using a credit card to send money outweigh the benefits, then there are alternative methods you can use.
Bank transfers
You can use your checking or savings account instead of a credit card to send money for certain transactions. There are generally no additional fees on platforms if you use a bank transfer, and there is no impact on your credit and no accrued interest. To initiate a bank transfer, you will need to know your routing number and account number, as well as your recipient's name, account number and routing number.
Debit card transfes
Another alternative to using a credit card to send money is to use a debit card instead. Debit card transfers tend to have lower fees than credit card transfers, and using a debit card generally won’t impact your creditworthiness.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
