How to send money with a credit card

In some situations, sending money with a credit card might be more convenient than using funds in your bank account. But it may come with a higher price tag and some other considerations.

What you’ll learn:

• Common ways of sending money with a credit card include payment apps like Cash App, PayPal and Venmo.

• Using a credit card to send money may be considered a cash advance. That may incur additional costs.

• Sending money with a credit card might take anywhere from a few seconds to several days, depending on the card issuer and method used. 

• If you’re considering sending money with a credit card, it’s important to understand the potential costs, impacts on your credit and how to keep your card safe and secure.

There are a few options for sending money to someone else. They may come with fees and high interest rates though. And as with all the ways you can use your credit card, it’s important to do it responsibly. That includes things like making payments on time and staying well below your credit limit.

Peer-to-peer or P2P payments are a convenient way to send money to another person. They generally involve the use of third-party peer-to-peer apps and digital wallets. 

Some P2P payment apps let users link and use their credit card to send money. It’s typically free to send funds using your bank account or app balance, but there might be fees for payments made using a credit card. Plus, some card issuers consider P2P payments with a credit card to be a cash advance. These may come with a higher interest rate than a typical credit card purchase and a cash advance fee. 

Apps that allow you to send money with a credit card include:

• PayPal: P2P payments made using a credit card on PayPal may incur a fee of 2.9% of the transaction plus a flat fee of 30 cents per transaction.

• Venmo: Users may pay a fee of 3% of the transaction when sending money using a linked credit card.

• Cash App: There’s a fee of 3% of the transaction when sending money from a credit card.

Typically, a wire transfer shifts money electronically from one person’s or business’s bank account to another. But it may be possible to initiate a wire transfer with a credit card. 

Credit card issuers may consider a credit card wire transfer as a cash advance. That means you could pay a wire transfer fee and a cash advance fee. Plus, a cash advance may come with a higher interest rate than a typical credit card purchase. That’s on top of any fees the recipient may have to pay to receive the transfer.

When sending money with a credit card, it can help to consider the following:

• Understand what it might cost. Sending money with a credit card is typically more expensive than sending money from a bank account. The fees and interest may cancel out any credit card rewards you might earn.

• Make payments on time. If you decide to send money with a credit card, make sure you’ve got a plan in place to pay off the debt. The Consumer Financial Protection Bureau (CFPB) says you should make your payments on time, every time. That’s because your payment history is an important factor when it comes to your credit scores. 

• Understand how else it might affect your credit. Cash advances can increase your credit utilization ratio, which is the amount of credit you’re using versus your total available credit. The lower your credit utilization ratio, the better your credit scores might be. The CFPB recommends using no more than 30% of your credit limit.

• Know how to keep your credit card secure. Your credit card issuer may have systems and tools to protect your account. And you can take additional steps to secure your account by following guidance from the FTC and other federal agencies.

There are a few different ways to send money with a credit card. But they might involve fees and higher interest rates. And as always, it’s important to exercise caution and use your card responsibly.