How to Balance Finances with Transfers between Credit Cards and Bank Accounts

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Managing cash flows across credit cards and bank accounts is key to maintaining financial stability. This article provides tips on smoothly completing transfers from credit card to bank account.

Overview

Credit cards provide significant benefits like rewards, interest-free periods, and credit line buffers. However, overdependence on credit cards can make you incur high-interest charges and fall into debt traps. 

 

Transferring money from a credit card to a bank account helps rein in credit card spends, channel cash to meet financial goals, and avoid ballooning outstanding dues. 

 

Let us understand techniques to seamlessly manage such transfers.

 

Ways to Transfer Funds from Credit Card to Bank Account?

Here are some common ways to transfer money from your credit card to a linked bank savings or current account:

Cash Advance

Up to the cash withdrawal limit set, you can withdraw cash from ATMs using a credit card. The amount is transferred to the linked bank account. Cash advance charges apply.

Balance Transfer

Many credit cards allow transferring the outstanding balance to a linked bank account, usually at a small fee. The dues get paid off from the bank account directly.

EMI Transfer

Some banks offer converting credit card purchase amounts to EMIs payable from a bank account. The bank transfers EMI amounts from the linked account to settle credit card dues.

Reward Redemption

Credit card users can redeem rewards as direct credits into the linked bank account by accumulating sufficient reward points on spending.

Refund Transfer

When you return items bought on credit cards or get refunds, the amount can reflect as a credit balance on cards. You can request for this balance to be transferred to the bank account.

Tips for Smooth Transfers Between Credit Card and Bank Account

Follow these tips for seamless money transfers from credit card to bank account:

  • Check available transfer options with your bank, as they vary across banks.

  • Understand applicable charges, interest rates, and processing time for each transfer mode.

  • Initiate transfers well before credit card bill payment due dates.

  • Transfer only amounts you can repay to avoid spiralling debt.

  • Keep surplus savings in the bank for paying credit card bills to avoid failed transfers.

  • Set payment reminders for pending transfers to avoid missing credit card dues.

  • Compare and utilise the most cost-effective transfer facility as per your needs.

Smart Ways on How to Redeem Credit Card Points

Apart from direct bank transfers, credit card points can also be redeemed smartly in these ways:

  • Use points for shopping vouchers to get discounts on online/offline purchases.

  • Donate points to charitable foundations and get tax benefits.

  • Book flights, hotels, and activities through reward platforms using points.

  • Get gift cards from brands you frequently shop at to save on purchases.

  • Redeem points for digital gift cards you can email to friends/family.

  • Use points to subscribe to premium streaming services and magazines.

  • Donate points to school fees funds or pandemic relief programs.

 

Benefits of Transferring Credit Card Funds to Bank

Transferring funds from a credit card to a bank account provides the following benefits:

  • Helps liquidate credit card dues and avoid ballooning interest.

  • Allows channeling surplus credit card limits to achieve other monetary goals.

  • Frees up credit limit for fresh spends and rewards.

  • Consolidates spending power in bank accounts for better control.

  • Improves credit utilisation ratio, which benefits credit score.

Final Word

Prudent management of credit card spends by aligning with bank account funds is key to maintaining financial equilibrium. Balance interest-free credit with timely repayments by smooth transfers between credit card and bank account. 

 

Stay aware of available transfer mechanisms and smart redemption options for credit card points. Adopt these best practices to get the most from your credit card while avoiding debt traps.

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