How to Transfer Money from Credit Card to Bank Account ?

There may be times when you need urgent cash but only have available credit on your credit card. In such situations, Transfer Money from Credit Card to a bank account can seem like a convenient solution. While credit cards are primarily meant for purchases, there are legitimate ways to convert your credit limit into bank account funds. However, these transfers usually come with fees, higher interest rates, and credit score implications.

This blog explains all possible methods, charges involved, step-by-step processes, and important precautions to help you make an informed decision.

Can You Transfer Money from a Credit Card to a Bank Account?

Yes, you can transfer money from a credit card to your bank account—but not always directly. Most banks do not allow a simple “credit card to bank transfer” like a debit card. Instead, transfers happen through indirect methods such as cash advances, loans on credit cards, or third-party payment platforms.

Each method differs in:

• Interest rate

• Processing fees

• Repayment structure

• Impact on credit score

Methods to Transfer Money from Credit Card to Bank Account

Here are all the ways you can move funds from a credit card to any bank account:

1. Transfer via Payment Apps (Wallet → Bank)

This is the most commonly used method in India. You add money to a wallet using your credit card and then transfer that wallet balance to your bank account.

Popular Wallets That Support This:

• Paytm Wallet → Transfer to Bank
• FreeCharge Wallet
• PhonePe Wallet (limited support)
• Mobikwik Wallet

How It Works:

• Add money using credit card (fees apply)
• Go to “Transfer to Bank” option
• Enter bank details → Confirm transfer

Fees & Charges:

• 2%–4% wallet loading fee
• Interest from Day 1 (cash-like transaction)

Pros:

• Instant transfer
• Easy and widely accessible

Cons:

• High fees
• No interest-free period

2. Direct Transfer Using Bank App (Cash Advance to Bank)

Many major banks now allow direct transfer from credit card to bank account through their mobile banking apps.

Examples:

• HDFC Bank: Cash → Bank Transfer
• ICICI Bank: Transfer using “Card to Account”
• Axis Bank: Insta Cash Transfer

Charges:

• Cash advance fee: 2.5%–3%
• Interest starts immediately
• GST on fees

This method is reliable but expensive.

3. Credit Card Loan / Personal Loan Against Credit Limit

This is the cheapest and safest method. Banks offer “Loan on Credit Card” or “Personal Loan on Credit Limit,” where funds are transferred directly to your bank account.

Benefits:

• Lower interest compared to cash withdrawal
• EMI options available
• Instant approval for eligible users

Drawbacks:

• Approval required
• Not available to all users

If you need money for 3–24 months, this is the best method.

4. Balance Transfer to Bank Account

If your goal is to clear another credit card bill or loan, banks let you transfer existing debt to your bank account or another card with lower interest.

Suitable For:

• Clearing high-interest card dues
• Moving debt to a low-interest EMI plan

Interest rates are much lower than cash advances.

5. Credit Card Cash Withdrawal → Deposit into Bank

The simplest but most expensive method.

Why it’s costly:

• Cash advance fee 2.5%–3%
• No interest-free period
• Interest starts immediately

Use this only if nothing else is available.

Step-by-Step: How to Transfer Money from Credit Card to Bank Account

Charges for Credit Card to Bank Transfer

Type of Charge	Typical Range
Wallet Loading Fee	2%–4%
Cash Advance Fee	2.5%–3% of amount
Monthly Interest	2.5%–4% (30%–48% APR)
Loan Processing Fee	1%–2%
GST	18% on fees

Important: Transferring money from a credit card removes the interest-free period until you clear the full outstanding balance.

Which Method Is the Best?

Method	Cost	When to Use
Loan on Credit Card	Low	Best for planned needs, EMIs
Balance Transfer	Medium	For clearing debt
Wallet → Bank Transfer	High	Instant small transfers
Cash Withdrawal	Very High	Absolute emergencies

Impact on Credit Score

Transferring money from a credit card can impact your credit score in the following ways:

Used responsibly, it won’t hurt your score but misuse can cause long-term damage.

Is It Safe?

Yes, it is safe when done through:

• Official bank apps
• Trusted wallets (Paytm/FreeCharge)
• Verified UPI-enabled transfers

Avoid any third-party apps or unofficial websites.

Should You Transfer Money From a Credit Card?

Only if necessary. It is an expensive form of borrowing. Consider cheaper alternatives such as:

• Personal loan
• Salary advance
• Loan on credit card (EMI)
• Credit line apps with low interest

Tips to Reduce Charges

• Prefer “Loan on Credit Card” instead of wallet transfer
• Repay the amount within a few days to minimize interest
• Check your bank’s fee chart before proceeding
• Enable alerts so you don’t miss the due date

Common Mistakes to Avoid

• Treating cash advance like regular spending

• Ignoring interest compounding

• Missing EMI due dates

• Using multiple cards for cash withdrawals

• Not checking repayment terms

Best Alternatives to Credit Card to Bank Transfer

Is Transferring Money from Credit Card a Good Idea?

Pros

• Instant access to funds

• No separate loan approval required

• Useful during emergencies

Cons

• High interest rates

• Immediate interest calculation

• Increased credit utilisation

Best used only for short-term or emergency needs.

Tax Implications of Transferring Money from Credit Card

Understanding the tax impact of transferring money from a credit card is important to avoid confusion and compliance issues. While the transaction itself is simple, the charges and interest involved have specific tax treatments.

Is Credit Card Cash Taxable?

No, the money transferred from a credit card to your bank account is not considered taxable income. It is treated as borrowed funds, not earnings. Since the amount must be repaid to the bank along with interest, it does not fall under income tax.

However, if the transferred amount is later used to generate income (for example, in business activities), any profit earned may be taxable under applicable income tax rules.

GST on Processing Fees

Yes, GST is applicable on charges related to credit card cash transfers.

• Processing fees

• Convenience charges

• Cash advance fees

GST is typically charged at 18% on these fees. The GST amount is added to your credit card bill and increases the overall cost of borrowing.

Interest Deductibility (If Any)

• For personal expenses, the interest paid on credit card cash transfers is not tax-deductible.

• For business purposes, interest may be claimed as a business expense, provided:

  • The borrowed amount is used strictly for business

  • Proper documentation and records are maintained

Always consult a tax professional before claiming such deductions to ensure compliance.

Real-Life Use Cases

While transferring money from a credit card should not be a regular habit, it can be useful in specific situations where quick access to funds is required.

Medical Emergencies

Unexpected medical expenses often require immediate cash payments. In cases where insurance approvals are delayed or savings are insufficient, a credit card transfer can provide instant liquidity. Choosing an EMI-based loan on credit card helps manage repayment without financial strain.

Short-Term Business Cash Flow

Small business owners and freelancers may face temporary cash flow gaps due to delayed payments or seasonal slowdowns. A credit card to bank transfer can help cover:

• Vendor payments

• Utility bills

• Salary payouts

This option works best when the cash gap is short and repayment capacity is clear.

Travel or Education Expenses

Urgent travel bookings or education-related fees sometimes demand immediate payments. Transferring money from a credit card can help manage such expenses when:

• Funds are temporarily unavailable

• EMI options are preferred for repayment

However, for large or long-term expenses, personal or education loans may be more cost-effective.

FAQs: Credit Card to Bank Account Transfer

1. Can I transfer money from my credit card to my bank account for free?

No. There is no free method to transfer money from a credit card to a bank account. All methods wallets, cash advance, and direct bank transfers carry fees or interest.

2. What is the cheapest way to transfer money from a credit card to a bank account?

The cheapest and safest option is the Loan on Credit Card or Credit Card EMI Loan, as it offers lower interest rates, structured EMIs, and direct transfer to your bank account.

3. How long does it take to transfer money from a credit card to a bank account?

It depends on the method:

• Wallet → Bank: Instant
• Bank App Cash Transfer: Instant
• Credit Card Loan: Instant to 24 hours
• Balance Transfer: 1–3 days

4. Does transferring money from a credit card affect my credit score?

Not directly. But if you delay repayment or revolve the balance, your utilization increases and interest accumulates which can reduce your credit score. Paying on time keeps your score safe.

5. Can I use UPI to transfer money from a credit card to a bank account?

You cannot directly use UPI to send money from a credit card to a bank account. However, some apps allow loading a wallet via credit card and then withdrawing using UPI but fees will apply.

6. Is it safe to use Paytm or PhonePe to transfer money from a credit card?

Yes, these are RBI-regulated platforms and safe for transfers. But always check the applicable fees. Never use unverified third-party apps that claim “zero fee transfers.”

7. How much money can I transfer from a credit card to a bank account?

You can transfer up to your available credit limit or cash limit, depending on the method. Wallet apps may have their own monthly or per-transaction limits.

8. Will I get an interest-free period on credit card to bank transfers?

No. There is no grace period for cash-like transactions. Interest starts immediately until the entire outstanding amount is cleared.

9. Can I cancel a credit card to bank transfer?

Once the transfer is completed, it cannot be reversed. Wallet transfers and direct bank transfers are final. For mistaken transfers, you must contact customer support, but success is not guaranteed.

10. Should I use credit card to bank transfer for large expenses?

Only if absolutely necessary. The fees and interest make it expensive. Instead, choose:

• Credit card EMI
• Loan on credit card
• Personal loan
• Salary advance

These options are usually far cheaper than wallet or cash advance transfers.

Conclusion

Transferring money from a credit card to a bank account is possible, quick, and sometimes necessary but it comes with higher costs compared to normal credit card usage. The cheapest method is taking a loan on credit card or balance transfer, while wallet transfers and cash withdrawals should be used cautiously due to high fees.

Choose the method carefully based on urgency, repayment ability, and total cost.