How to Transfer Money from Credit Card to Bank Account To Make Vendor Payments
Running a business is not an easy task. You have to not just manage the day-to-day operations, manage the employees and the vendors, but also the finances to make sure everything runs smoothly. But there are times when business owners struggle because of a lack of working capital. What do you do then?
You’ve probably heard of different ways to go about this, but do you know you can now send money from a credit card to bank account? You might be wondering: Is this even a thing? Don’t worry, we’ve got you covered. Whether you’re juggling a side hustle or running your own business, we’re going to break down everything you need to know about this financial maneuver.
Working Capital for Business
There are times when you don’t have enough liquidity to manage your business payments. But if you miss these payments, the consequences could be huge and can hamper the business. To finance these payments, businesses traditionally reached out to Banks or NBFCs for working capital. But we all know how lengthy the process is and usually involves collaterals and a lot of wait time. Well, those days are long gone, thanks to the new payment innovations that make everything faster, easier, and way more secure. One exciting new trend you might want to know about is transferring money from your credit card to your bank account. Yep, that’s right—it’s another super convenient way to settle your business payments!
Why Use a Credit Card for Business Payments?
Credit Card is a simple financial tool that has been used for decades to manage the expenses of both businesses and individuals. But there are also multiple benefits that you get when using your credit card for business expenses. We have listed down some of them –
Building Credit History
Regular, on-time payments of your credit card bill can improve your credit score. This gives the lenders the confidence that you can be trusted with credit, which helps increase the chances of availing a line of credit from the lenders, that too at lower rates.
Rewards and Cashback
Many credit cards offer rewards and cashback on the spends. The more the spends, more are the rewards or cashback received which is an added incentive to use the Credit Card to bank transfer facilities. This has prompted many businesses across India to start using this method of payment.
Before Credit Cards came into existence, access to capital was limited to either cash in hand or to approach a financial institution with the hopes of securing a line of credit. However, since its introduction, Credit Cards have made it easier for us to get access to funds on credit. That is the convenience Credit Cards offer.
Interest-Free Credit Period
Banks who issue credit cards give up to 45 days of interest-free credit period which greatly helps businesses with the cash crunch.
So, being able to send money from your credit card to your bank account is pretty handy for things like paying vendors, rent, salary and other business expenses. But like any other financial offering, it comes with its own risks and benefits. Whether it’s the impact on your credit score, the associated transaction fees, or the ease of managing cash flows, each aspect has its own implications. By taking the time to understand these, along with the legal nuances, you can make an informed decision that suits your specific needs and circumstances. Staying informed about such financial options could offer you an unexpected but valuable lifeline in managing both personal and business finances effectively.
Frequently Asked Questions (FAQs)
1. Is it safe to transfer money from a credit card to a bank account?
Yes, it is safe to send money from credit card to bank accounts if done using secure and verified methods. Platforms like KredX Pay offer a safe tool for credit card to bank transfers.
2. Are there any limits on how much can be transferred?
Limits are generally set by your issuer on your credit card spending. Most platforms that allow this facility do not keep a limit at their end.
3. Will transferring money affect my credit score?
Transferring money from a credit card will not affect the credit score if the bill is paid on time. It is also generally advised to keep the credit utilization below 33% of your credit limit.
4. Is there any fees involved while sending money to a bank account from credit cards?
Yes, there is an MDR (Merchant Discount Rate) or Transaction fee charged while sending money from your credit card to a bank account.