If you’re wondering how to send money with a credit card but are worried that you’ll run into hidden fees or charges, you’re right to be concerned. After all, the various apps and tools you can use to send money with a credit card incur additional fees, although the amount you’ll pay varies and may be worth it in an emergency.
If you’re trying to figure out how to send money to someone using a credit card but aren’t sure which options work best, read on to find out which tools and platforms allow you to do so, how much they charge, and what to consider before charge a fee. money transfer to your credit card.
Ways to send money from a credit card
There are several popular tools and strategies that you can use to send money with a credit card, and each has its pros and cons. If you owe money to someone but don’t have any money to spare, these apps and steps might be what you’re looking for.
Cash Application
Cash App is an online and mobile banking app that allows you to manage your money, send cash to friends, and invest in stocks and cryptocurrencies starting as low as $1. You can use the app to instantly pay anyone for free as long as you have a cash balance, but you can also connect a credit card and make money transfers with plastic.
If you send money to someone using your credit card, Cash App adds a 3% fee to your transfer. This means that transferring $100 to a friend via Cash App using a credit card will actually cost you $103, and this does not include any additional fees you will incur if you fail to pay your credit card balance in full by the due date.
Venmo
Venmo is a user-friendly mobile app designed from the ground up to support social payments between family, friends and acquaintances. Not only can you send and receive money through Venmo, but you can express your opinion in a payment note with every transaction.
While Venmo is free to use and does not charge a fee if you send money using a cash balance, it does charge a 3% fee if you send money using a linked credit card. In other words, you can use a credit card to send money with Venmo, but it will cost you money.
PayPal
PayPal also makes it easy to make purchases or transfer money to people for almost any reason, and you can fund your transfers with your cash balance, debit card, or credit card. Getting started with a PayPal account is completely free, and the steps required to open an account can be completed in five minutes or less.
If you choose to send someone money with a credit card using a PayPal account, you will be charged a fee of 30 cents plus 2.90% of the transaction amount.
Take a cash advance
Finally, don’t forget that you can withdraw cash from a credit card at an ATM if you have available credit. You will need your credit card PIN to do this, but you can find out your current PIN or set it by calling the number on the back of your credit card.
Credit card cash advances are expensive and should only be used to facilitate personal money transfers as a last resort. Not only does your credit card charge you a cash advance fee, which is usually around 5% of the withdrawal amount, but you won’t get a cash advance grace period. This means that credit card interest will start accruing on your cash balance from day one.
What to look for before sending money from a credit card
Can I send money by credit card? Absolutely. Should I send money by credit card? This is a completely different question.
The thing is, there are pros and cons to using a credit card to send money to someone.
hidden fees
Choose a credit card to send money to, and you’ll likely end up paying additional fees to your card issuer. This is because the combination of some peer-to-peer apps with certain cards is coded as a cash advance, not a purchase. And remember, these fees are on top of the fees charged by the platform itself.
For many cards, this cash advance code activates a higher interest rate that starts at the time of the transaction, as well as a separate cash advance fee, often $10 or 5% of the transaction, whichever is higher.
So a combination of peer-to-peer fees, credit card cash advance fees, and a higher interest rate (no grace period) can make sending a few hundred dollars a little more expensive than you planned.
No credit card refund entitlement
Unlike other places, you are not eligible for a refund when you use credit cards for peer-to-peer money transfers.
When you present your credit card in an online or brick-and-mortar store, the seller is involved, and the law provides a right to a refund to protect you if you don’t get what you were promised in the transaction. But peer-to-peer money transfers don’t have a merchant, so laws don’t currently give consumers any refund rights, says Christina Tetro, a former financial policy manager at Consumer Reports.
“The right to chargeback requires the seller,” Tetreo says. “One of the hurdles the consumer has to go through is trying to negotiate with the seller.”
If you use a peer-to-peer service and send the wrong amount or send money to the wrong person, most platforms advise that the only way to get it back is to contact the recipient and ask them to return it. And it’s often the same whether you’re using a credit card, debit card, bank account, or savings account on the platform.
Doubtful reward value
Some consumers may think they can beat the system by sending money with a rewards credit card to score points or get a refund. However, the fee required to send money to someone using a credit card usually outweighs the benefits of any bonus points you earn. In addition to platform fees, there are also previously mentioned hidden fees to look out for.
As an example, let’s say you have a cashback credit card that earns 2% cashback with no annual fee. If you use a money transfer app to send cash and pay a 3% fee for using a credit card, you will pay a $3 fee for every $100 you transfer but only get $2 reward . Of course, you will pay even more fees and interest if your credit card encodes the transaction as a cash advance.
In any case, this is a losing proposition, so it rarely makes sense to use money transfers to accumulate bonus points.
Worth a little research
If you’re sending money and want to use a credit card, take the time to do a little digging first. To get started, spend some time checking out the peer-to-peer site. Luckily, most peer-to-peer platforms make this clear when there is an additional charge for using a credit card, says Tetro. For example, with Venmo you will even get a popup message.
Also find out if credit card transactions on the platform will be treated as a cash advance by your credit card issuer. If your preferred platform does not publish this information, you may need to contact customer support to find out.
Ask your card issuer the same question: Are peer-to-peer money transfers on your chosen platform considered cash advances? If yes, what is the interest rate and commission for cash withdrawal?
“The harsh truth is that you may not be able to know about it in advance,” says Tetreo.
bottom line
There are several ways to send money with a credit card, but they all have certain conditions. To avoid unexpected fees and excessive interest, do your research, learn the steps associated with your chosen platform, and make sure you know the true cost of sending money with your credit card.
Editorial disclaimer
The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.
