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A credit card deposit is a feature that allows you to transfer funds available on your credit card to your chequing account. For example, if you have $1,000 available on your credit card, you can transfer that $1,000 to your chequing account, and access it in cash.

Here's what you need to know about credit card deposit transfers:

  • The money is moved to your chequing account, and you can use it for whatever you choose
  • The money you transfer to your chequing account will count toward your overall credit card balance
  • Like purchases charged on your credit card, the money you move into your chequing account will also be charged interest, if it is not paid back during the interest grace or promotional period

Credit card deposit with 0% interest for a year

A great example of a credit card deposit is offered by the MBNA Platinum Plus® MasterCard® credit card, which offers 0% annual interest rate (AIR)† on balance transfers* and deposits* for 12 months.

That’s like borrowing cash interest-free for a year! Think of your credit card deposit as a limited-time, low-interest loan. You can use the cash for any purpose. For example:

  • Money needed for investments
  • An emergency fund
  • Unexpected expenses
  • Projects around the home

However, if the funds are not paid back on the credit card before the promotional period has expired, they will incur interest at the regular rate (17.99%).

Have a plan to pay it back

Pay your deposit loan back before the grace period or promotion low interest rate period has expired. Failing to pay back your credit card loan will turn those low-interest funds into high-interest debt in a flash. Before you take any funds from your credit card, ensure you can afford to pay it back on time, and create a dedicated payment plan:

Deposit amount / number of months in low interest period = your monthly payment!

Understand changes to your credit card payments

Using a feature like a credit card deposit or balance transfer changes how your credit card payments work -- it’s very important to understand these changes so you don’t encounter any surprises on your bill.

No more grace periods on purchases: Often, using the deposit feature will void your credit card’s grace period. This means you’ll no longer have 30 days to pay off additional purchases made with your credit card -- they will incur interest right away, until the deposit loan is paid back in full.

Your payments will be split: The credit card lender will now divide any payments you make on your credit card, meaning it will take more funds to pay down your principal balance.

  • First, your payment will go toward interest charges, then any fees charged on the card.
  • Second, a portion of the payment will go toward the deposit loan (which, if it’s during the promo period, is charging little or no interest).
  • Finally, the remainder of the payment will go toward your principal credit card debt, which is charging the highest amount of interest.

What not to do with a credit card deposit

Access to interest-free money sure is tempting but take care when using this credit card feature. Avoid these deposit don’ts -- they’re a sure-fire recipe for ending up in a debt hole:

  • Don't withdraw funds from your credit card without a plan to pay it back
  • Don't pay only the minimum required payments
  • Don't forget that additional purchases made with the card will have no grace period
  • Don't forget to pay your deposit loan back before the end of the promotion period

How else can I access cash from my credit card?

Cash advances: This credit card feature allows cardholders to withdraw funds from their credit card at an ATM. However, there are often steep interest charges on withdrawn cash, charged without a grace period.

Balance transfers: This credit card feature allows cardholders to move a pre existing balance from one card to another. Credit cards with low balance transfer features will offer a lower interest rate for a period of time, giving the cardholder the chance to pay down their principal debt.

Penelope Graham

A first-time homeowner and newbie investor, Penelope Graham is the quintessential millennial, navigating the world of personal finance and wealth management. A self-professed monetary policy nerd, she follows the often-controversial housing market closely and specializes in mortgage, credit card and personal finance news.

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