A credit card allows one to borrow finances from your issuer. It allows you to purchase services and goods from online and physical stores. You have to repay your debt every month since it is a revolving loan when you get the card. Usually, you have to repay your loan with interest on top, as that is one way the issuers make money. You will learn how to withdraw money from credit card online shortly.
Since the cards electronically hold money, there comes a time when you need cash. Some places do not accept card payments, especially if you live in rural areas. Even though walking around with cash is sometimes risky, it is always nice to have a few notes in your pocket. You do not expect to buy chewing gum or something minor using a credit card anyway, as that will appear ridiculous.
It is important to know that we have tangible and virtual credit cards. The virtual ones are the ones you cannot touch or see. They are in the form of numbers whereby you only have the card number, expiry date plus your security code. The disadvantage of the virtual card is that you can only use it online to buy goods and services. The tangible one is applicable for online and in-store purchases and is thus the most convenient.
How does a credit card operate?
A credit card operates in a simple manner. Once you get it from your issuer, you can buy goods and services from various merchants and services providers. Usually, the cards have a credit limit whereby you cannot spend beyond that. A credit limit varies from one person to the other. When you purchase something with your card, your credit limit goes down.
During payments, you can tap or swipe at a physical store so that the systems can automatically deduct the payments from your account. When paying online, you should provide the card number, the expiry date, and the security code. Some issues usually give you rewards, including cashbacks, miles, and points for using your card.
Once you exploit your credit limit, you should repay the debt first before getting another limit. The better your payment patterns, the more your limit increases as days go by. However, you should note that using all your limits is detrimental to your overall FICO scores. Your scores can drop drastically, and you can find it challenging to borrow from creditors.
How to use a credit card?
There are various ways you can use a credit card. They include the following.
i) Buy goods and services
You can buy goods and services using your credit card. As mentioned above, you can purchase online or at physical branches. Online purchasing is convenient and time-saving compared to shopping at physical stores. You only need to give your details to the merchant when checking out to make your payment. You should ensure that you make your purchases from the stores with a good reputation. These include Amazon, eBay, Alibaba, etc.
ii) Withdraw money at an ATM
It is factual that you can withdraw money from a checking account at an ATM point using your debit card. Similarly, you can withdraw money from your credit card account at an ATM place using your credit card. It usually comes with a PIN, and you have to insert it into the machine, enter your PIN, and proceed to withdraw funds.
iii) Withdraw money to a bank account
You can withdraw money from your card to your bank account at a branch. That is called cash advance and comes with high fees and high-interest rates. You may require money in your account, and the only source is your credit card. Therefore, you have to withdraw money from your account. Using a convenience check is one way you can transfer funds to your bank account.
iv) Get a convenience check
You can get a convenience check from your issuer to pay someone or use it for various transactions. A convenience check operates like regular checks, although it can be expensive to obtain. You can cash it out or deposit it into your bank account.
v) Add to mobile wallets
You can use your card to fund transactions if your wallet account does not have sufficient funds. Such wallets include PayPal, Payoneer, Venmo, etc. Mobile wallets also support banks. You can even make an instant bank transfer without a debit card if you use a mobile wallet as a medium of transfer. When you add money to your mobile wallet, you can make an instant transfer to a bank account or debit card.
How to withdraw money from Credit card online
You can withdraw money from your credit card online using two main ways. The first method you can use to withdraw money from your credit card is using e-wallets such as PayPal, Apple Pay, Venmo, etc. To carry out the transfer, you must add your card to your e-wallet account, then add money to your wallet from the card. Remember that the process can be costly too. Once the funds are in your wallet account, you can decide to transfer the money to your bank or credit union account.
Another way you can withdraw money from your card online is by logging in to your bank account online and accessing your credit card balance, then choosing to withdraw money from your card to your bank. The steps below are necessary for the transfer.
- Open the website of your bank.
- Log into your credit card account
- Select a transfer method.
- Enter the amount you want to transfer.
- Fill out the essential details.
- Follow any other instructions to complete your transfer.
The question is, can you transfer money from a credit card to a debit card? The answer is yes. You can transfer money from your credit card to your debit card. I know you are wondering how that is possible. When you transfer money from your credit card to a checking account that links the debit card in question, the funds will be available on your debit card. Even though the transfer is indirect, it still works.
What is the difference between a credit and a debit card?
You probably have heard about debit cards, and now I am talking about credit cards which might leave you confused. The truth is that the two are different in how they operate. Even though the two cards look the same and have card numbers, expiry dates, and security codes, they differ in the following ways.
- The money in a credit card belongs to the issuer, while the funds in a debit card belonging to you.
- You have to borrow finances from your issuer for a credit card, while you do not have to borrow money with a debit card.
- When you use a credit card, your issuer charges you interest while there is no interest on a debit card.
- You must meet some requirements, such as having a borrowing history or security deposit to get a credit card. Debit cards do not require you to meet any requirements.
Can you send money with a debit card?
Most debit card issuers allow you to manage your card online using your smartphone or computer. Therefore, you can transfer money from a debit card to a prepaid card or other payment cards.
You will need to obtain the prepaid card details, such as the routing and account number, to make your transfers. Prepaid cards too have their accounts with details like those of banks. For your understanding, prepaid cards do not necessarily link to any bank or credit union.
However, issuers allow you to link your card to a bank. Prepaid cards operate like debit cards in that you can only spend what is in your account unless you get an overdraft.
What are the types of credit cards?
There are two types of credit cards. We have the secured and the unsecured ones. Let us look at each one of them.
i) Secured credit cards
The secured credit ones require you to deposit money as security in your account. You can use another bank account to add money to your account, whereby you should transfer money using the routing and account number of the bank you are getting your credit card for.
The amount you deposit will stay there until the time you obtain favorable credit scores to get it. Usually, your financial companies lock the money so that you cannot use it and release it when necessary. If you cannot pay your debt, they can use the deposit to repay the money you owe them.
ii) Unsecured credit cards
The cards require you to have some borrowing history to get them. That means you must have FICO scores to get one. We have bad, fair, good, and excellent credit cards depending on your scores. The bad score credit cards are for individuals with the poorest scores, while excellent credit cards are for people with excellent scores. Scores range between 300 and 850, whereby 300 is the worst score, and 850 is excellent.
Bottom line
A credit card allows one to borrow finances from their issuer. We have two main types of such cards, which include secured and unsecured ones. The secured credit cards require a security deposit to get them, while the unsecured ones require a borrowing history. You can use a credit card for various transactions including sending money online, buying goods and services, and getting cash advances. The card’s uses resemble that of debit cards.
