Sending money online with a credit card is convenient – but is it really your best option? Almost everybody has a credit card these days since they are so convenient and easily available. If you want to make purchases online, a credit card is pretty indispensable.
But did you know sending money online with a credit card can carry some major hidden fees? Most people don’t even realize how much they’re giving away in credit card processing fees on their international transfers until it’s too late. Let’s take a look at the upsides of using a credit card to send money, why it’s so expensive, and how you can save yourself some cash by using alternatives.
Benefits of Using Credit Cards Online
Credit cards are a part of our daily life. Almost every store and restaurant nowadays accepts credit cards. We prefer to use them instead of cash. And why not? They’re safe and secure, and they even help us in situations when we don’t have any cash. They are such a big part of our lives that we take them for granted. And because of their convenience, we sometimes ignore the fact that we’re actually getting taken for a ride on fees.
High Fees on Credit Card Transfers
Credit card companies are well known for the high interest rates they charge consumers, but there is another way that they earn money. They charge high fees to the merchants that we buy goods and services from. We expect all merchants to allow us to pay by credit card. And that’s for good reason. If a merchant was cash only, there is a good chance they would go out of business.
…And Even More Fees
Credit card fees are high because the credit card companies charge merchants multiple fees when placing transactions. First, they typically charge a fixed fee just to have a merchant account. Then they charge a percentage of the transaction, which is usually around 2% to 2.5%. Finally, they often also charge an “inquiry fee” of 20 to 35 cents per transaction.
Because of this, money transfer companies that offer credit card transfers are often paying a high premium for the facility to offer these types of transactions. And if you know anything about most transfer companies, you’ll already know that their fees are massively marked up. That means if they’re paying high fees on their merchant account to process credit cards, they’ll be passing on that cost to their customers at a significant markup. When you add this to the costs inherent in international transfers, such as currency exchanges and bank processing fees, you start to see why sending money overseas with a credit card is one of the most costly options at your disposal.
Alternatives: Sending Money Online Without a Credit Card
Luckily, there are other alternatives to sending money online with a credit card. One of them – which is much more affordable than using a credit card – is using a direct bank-to-bank service like OrbitRemit. The fees are very low since the money is transferred bank-to-bank, not incurring the extra transaction costs involved in credit card processing. It’s easy to transfer the money since you can do it online or on your smartphone. Generally it’s quicker than an international credit card transfer as well – our transfers are deposited into the recipient’s bank account the same day we receive the funds.
Alternatively you could use a service like Paypal, but likely to pay just as much if not more in fees as you would using a credit card. Beyond that, the recipient has to allow up to a week between withdrawing money from their Paypal account and actually having the funds available at the bank.
If you regularly send money online with a credit card, think about how much you might be losing every time you make a transaction. Now think about how many times you transfer money each year. It adds up. Instead of giving your hard-earned cash to the credit card companies, banks or greedy money transfer giants – it’s time to start saving a little more for yourself. One of the best ways to do this is to start using a direct bank-to-bank service like OrbitRemit. It’s fast and convenient, and it will save you money.