Personal finance specialist Joyce Chou notes that there are ways to send money during times of need even when you might not have enough cash in your savings or checking account. Chou writes in a blog post published by Remitly, a cross-border payments service, that perhaps you’re only a few days out from payday and a sudden emergency arises back in your home country. Or maybe you just might not have had the chance to visit an ATM for an unexpected financial issue.
Whatever the case may be, if you don’t have enough cash, it’s still possible to send funds to a friend or family members by using your credit card, Chou explains. She also mentions that money transfer services such as Remitly make it easier to send money abroad with a payment card.
Chou points out that whether you’d like to use a credit card to send funds online to a local recipient or overseas, Remilty can help guide you through the whole process.
Chou explains that before you start sending money with your credit card, it’s important to know that these transactions are usually treated as cash advances by financial services providers. For those consumers that are new to this term or concept, you may think of cash advances as a short-term loan from your credit card provider, Chou noted.
She added that “in other words, by taking out a cash advance, you’re essentially borrowing money from your card’s line of credit—which comes with a transaction fee.” She confirmed that you’ll find the interest rate for cash advances is generally more than for other charges.
She further noted that depending on your particular credit card provider, this might be a certain percentage of the total amount transacted or a fixed fee (usually whichever one is greater). Chou also mentioned that we must always check with the financial service regarding their transaction fees so we’re not in for any surprises.
“Given these extra costs, it may be better to wait until you have cash and can send money using your debit card. That’s because your debit card draws from your checking account, which means you can’t spend more than you have (without incurring an overdraft fee, that is). As convenient as it is, transferring money to a bank account using a credit card should be treated as a last resort or in case of an emergency.”
Although there are many money transfer services out there, not all of them allow customers to send funds using their Visa, MasterCard, or other type of credit card. For example, the Zelle service only takes payments made via linked debit cards and checking and savings accounts, Chou explains.
Services that take credit cards as a payment method and that may be used for sending money to recipients within the same country as you include: PayPal, Venmo, Cash App, among others.
(Note: to learn more about these services, check here.)