Presume that you are on vacation and enjoying the resonant culture of the city and the history of the foreign land. Out of the blue, you receive a call from your family member who requires medical attention immediately. You think of sending money instantly but traditional methods like bank transfers can be tricky and time-consuming. This is where credit card comes into the picture. You can now transfer the funds instantly just with a swipe of your credit card and help your family member.
In India, there are more than 86 million people using credit cards. With the numbers growing significantly, understanding the basics of using credit cards on international money transfers become crucial. This guide helps you navigate through the world of credit cards in international money transfers by comparing options like reliability, swiftness, and safety without breaking the bank.
What is a Credit Card?
A credit card is a payment card issued by banks or any other financial institution to its customers. With the help of these cards, customers pay their bills for purchasing goods and services from merchants or withdraw cash from ATMs. Using a credit card essentially signifies that a customer is borrowing short-term funds from the lender to satisfy their essentials.
Key aspects to know about credit cards
- Credit Limit: It is the maximum borrowing limit of the customer from the credit cards. This limit is often set by the banks and financial institutions based on the creditworthiness of the customers which means the ability to repay the debt.
- Interest Rates: Interest is levied on the borrowed amount of the customer if they fail to repay within the specified time frame.
- Grace Period: This is the time frame set by banks and financial institutions for customers to repay the amount borrowed from credit cards. If the repayment is done within this period, you won’t be charged any interest. These grace periods generally differ from one lender to another.
Role of credit cards in international money transfers
Credit cards enable customers to transfer money instantly to any part of the world. As this has a wider acceptance, it eliminates the risk of carrying physical cash. Credit cards provide security and protection against fraudulent or unauthorized transactions. Some credit cards even benefit customers by offering free lounge access at airports, travel insurance, and reward points on purchases made.
Here are some of the steps involved in transferring money abroad:
- Initiation: The first step is to choose the service provider and furnish the bank or card information of the recipient to transfer funds. This includes name, account number, name of the bank, and SWIFT/BIC code.
- Conversion: In this stage, the service provider will convert the currency. The exchange rates and fees are levied on the total amount that the recipient receives.
- Transaction: At this point, the funds are deducted from the credit card account holder and treated as cash advances by the issuer. This attracts higher interest rates and fees compared to normal purchases.
- Receiving: The recipient’s bank processes the funds and credits them to the determined account. The funds will be available within a few hours or sometimes days, depending on the lender and service provider.
Things to be considered
- Charges & Fees: Making international transfers through credit cards can be expensive. Charges like currency exchange fees, cash advance fees, and interest rates are levied. It is always good to review and compare the fees of your credit card lender and the service provider.
- Transfer Limits: Credit cards come up with certain limits on the amount the customer can send at a single point in time or within a certain time frame. Ensure that these limits are suitable as per your requirements.
- Regulations: International money transfers should adhere to the regulations of Anti-Money Laundering (AML) and Know Your Customer (KYC) laws. Furnish all the required information and documents to make international transfers faster and easier.
Why pay more for international money transfers when moneyHOP is here?
- NO hidden fees
- ZERO convenience fees
- Real-time updates
- Lowest exchange rates
Pros & Cons
| Pros | Cons |
|---|---|
| Transfers are faster compared to all other modes. | They often come up with hefty charges such as foreign transaction fees and cash advance fees. |
| Rewards cashback and points on purchases and money transfers | A high interest would be charged unless the credit card balance is paid off completely. |
| Eliminates the risk of carrying physical cash. | Carries the risk of leaking the credit card information. |
| Helps to build a good credit score if payments are made timely | Repayment delays or failures will be reflected in the credit score |
Alternatives to Credit Card Transfers
Bank Transfers: Making international payments through banks can be economical compared to credit cards. Although it is a time-consuming process, it provides the safety and security for the funds.
Online Money Transfer Services: Brands like moneyHOP offer a swift and economical way to transfer money internationally. They offer industry-best exchange rates, bank-level security, upfront customer support, and transparency in fee structure. When compared to banks and credit cards, online platforms like moneyHOP stand out as a beacon in international money transfers.
Need to pay your university fees and living expenses abroad?
Make international money transfers easier than ever! Enjoy no paperwork, secure & swift transfers, and real-time tracking.
Conclusion
International money transfer with a credit card is a very quick and convenient solution, but it comes with higher costs and certain limitations. Thus, by gaining insight into the underlying mechanisms of these transactions, and the related fees, and also exploring alternative ways, people can make mindful choices. It is very important to compare services and fees meticulously, taking into account the needs of both the sender and the recipient, to choose the best way to transfer money internationally.
Leave a Reply