Credit cards are significant payment cards that allow you to make your transactions both online and at physical branches. The cards resemble debit cards, although they are different in various ways. You can get a credit card from banks and credit unions. We have some financial technology companies who also offer credit cards as long as you meet their requirements. You will learn how to get money from credit card to bank account later.
If you are new to financial matters, you might be asking yourself what a bank is. A bank is a financial institution that allows you to deposit and use money. Banks offer various products such as checking accounts, savings accounts, credit cards, debit cards, Certificates of Deposits, IRAs, brokerage accounts, wealth management services, etc. To get bank services concerning depositing and using money, you must create a bank account.
A bank account is an agreement with your bank or any other financial company to deposit and use money. There are various ways you can deposit finances into your bank account. You can use cash, deposit from another bank, credit union, or use a mobile wallet such as PayPal, Cash App, Venmo, or Payoneer. However, our aim today is to see how you can use a credit card to transfer money to your bank account.
How to get a credit card?
You can get a credit card online or at a physical branch. An online card application allows you to visit the concerned branch, then apply for the card by providing your details. You should provide details such as your Social Security Number, email address, phone number, physical address, and an identification document. That is if you have not opened a checking account with them.
Once you apply, the card issuer then processes your request to see if you qualify. You can then get a notification in your email address about the application status. You can receive your card at your physical address and then activate it to start using it. You only need to visit the online platform of the card issuer and then proceed to activate by providing the card number, the CVV, and the card’s expiry dates. After that, your card issuer allows you to start using the card.
There are two main types of credit cards. They include secured and unsecured credit cards. But how are the two cards different? Learn more about the cards below.
i) Secured credit cards
Secured credit cards are payment cards that require you to deposit some money for security. The amount is called a security deposit. Usually, you get a secured card if you do not have any borrowing history. That means you have no credit scores to get any loan or line of credit. The amount you deposit determines your borrowing limit. Therefore, the more your security deposit, the more your borrowing limit.
You need to remember that the amount you deposit does not disappear. It is still your money, and you will get it later for use once you attain substantial scores to qualify for unsecured credit cards. By the way, secured credit cards charge low interest on the amount borrowed. That is because there is a security of the amount you deposited.
You can add money to your credit card account using your debit card. You can even make an instant bank transfer without a debit card to the card account using the necessary transfer services.
ii) Unsecured credit cards
Unsecured credit cards require credit scores to get them. Credit scores are numerical expressions of an individual’s creditworthiness. The scores range from 300 to 850, whereby 300 represents a bad credit score and 850 stands for excellent. We have various unsecured credit cards depending on scores, including bad, fair, good, and excellent credit cards.
The unsecured cards for bad credit charge high-interest rates compared to the others. That is because of the risks associated with the cards. The good and excellent score credit cards charge friendly rates because the borrowers have good repayment records.
What are the factors to check when applying for a credit card?
You should not just get any card you come across since that may be detrimental to your financial status. You must ensure that you get the card that fits your financial status by checking on the following factors.
i) Fees
There are various fees that credit card issuers charge. They include foreign transaction fees, monthly fees, annual fees, late payment fees, and cash advance fees. By the way, when you transfer money from your credit card to your bank account, then that is a cash advance.
Again, you can get a cash advance when you transfer money from a credit card to a debit card. Therefore, the fewer the fees, the better your card, as you will be able to save a substantial amount of money.
ii) Credit limit
The credit limit is the maximum amount of money you can borrow from your card issuer. If you get a card with a higher limit, you have a large amount of money to use for your transaction activities. That way, you will have enough allowance to borrow when needed.
iii) Credit scores/ minimum deposit requirement
If you are getting an unsecured credit card, you will need to know your credit scores to know the right card to borrow money from. Usually, when applying for an unsecured credit card, the card issuers have to check your scores to see if you qualify for the given card. They usually contact a hard inquiry to know if you qualify.
Hard inquiries usually drop your scores, and thus, making sure you know your scores allows you to apply for the cards you qualify for. That way, you can avoid multiple credit card inquiries. When applying for secured credit cards, you must check the card you can afford to pay for the security deposit.
Some financial companies usually set a minimum deposit that may be difficult to get. Others allow you to deposit the amount you feel comfortable with. For example, the Chime Credit Builder card allows you to deposit any amount you feel is suitable for your case.
iv) Interest
When you borrow with your card, there is some interest that you should pay together with the borrowed money. The interest is the profit of the card issuer and varies from one financial company to the other. You should get a card with low interest to save substantial money. You will likely have a credit card with a fantastic interest rate if you have good scores.
v) Rewards
Everybody likes to be valued for their good work. If you get a credit card from a particular company, you are helping them make money. Some appreciate you by giving you rewards such as miles, cash backs, or points. If you get such a card, then the better. However, while checking on the rewards, do not forget the other factors above. Some financial companies can use rewards to cover hefty fees and high rates.
How to get money from credit card to bank account?
I know you have been eagerly waiting for this part. You can get money from your credit card to your bank account. That is called a cash advance. The following are the methods you can use for the transfer.
1) PayPal
Paypal allows you to send money to others online. The platform also allows you to withdraw money to your bank account. You can add money to your PayPal account using credit cards, debit cards,s or bank accounts. To transfer money from your credit card to your bank through Paypal, you will need to add the card to PayPal, then initiate a bank transfer whereby you will get the funds from your card.
You can use Paypal to send money online with a credit card with no verification. A good example is when you use it on Paypal to transfer money to a bank account.
2) Venmo
Venmo also allows you to add a credit card to fund your transactions. Therefore, you can initiate a bank transfer and get the funds from your credit card to your bank account through the platform.
3) Cash App
Cash App works the same way PayPal and Venmo operate. You need to add the card to your Cash App account, then initiate a bank transfer, and the funds will reach your bank account within the stipulated time.
4) Use a convenience check.
Credit card issuers can give you a convenient check when the need arises. You have to apply it, and you are good to go. Convenience checks operate like regular checks. You can then deposit the check in your bank account. Once the check processing is over, you can get the funds in your account.
Checking accounts also offer check-writing services whereby you can write checks to others to make payments. They then deposit them in their accounts. You can indirectly transfer money from a debit card to a prepaid card by writing a check from the checking account that links to your debit card.
You can then deposit the check online using your prepaid card account app. Examples of prepaid cards that support check deposits include Netspend, Green Dot, and Walmart MoneyCard.
Bottom line
A credit card is among the most crucial payment cards that you can get from various financial companies such as banks, credit unions, and financial technology companies. A credit card allows you to borrow finances from your issuer. You can either get a secured or unsecured credit card. Various transactions you can do with your credit card include buying goods and services and getting cash advances.
