A Complete Guide to Sending Remittances Using a Credit Card or Debit Card on Remitly

Image Source: pexels

Yes, you can use a credit or debit card for Remitly transfers. Both methods offer convenience, but they differ significantly in terms of fees and speed. The payment method you choose directly impacts your transfer costs and the time it takes for funds to arrive.

The key is to weigh your options: debit cards typically have lower costs, while credit cards offer payment flexibility. Understanding this is the first step to making the best choice.

Key Takeaways

• Using a debit card for Remitly transfers is typically more cost-effective because it deducts funds directly from your bank account.
• Using a credit card for transfers may incur additional “cash advance fees” charged by your bank, not Remitly.
• Transfer speed depends primarily on the “delivery speed” option you choose, not the card type.
• For security, the name on the bank card used for payment must match the name on your Remitly account.
• If your card payment fails, check the card details and account balance, or contact your bank to confirm the transaction.

Credit Card vs. Debit Card: Core Comparison

Image Source: pexels

When deciding to use a bank card for Remitly transfers, understanding the core differences between credit and debit cards is crucial. This not only affects your wallet but also your overall transfer experience.

Fee Comparison: Which Is More Cost-Effective?

Fees are the most important factor when choosing a payment method. While both cards involve Remitly’s service fees and exchange rate markups, credit cards may come with an additional, costly fee.

• Debit Card: Using a debit card, funds are deducted directly from your bank account. It’s as straightforward as using cash. You only pay Remitly’s service fees and the markup included in the exchange rate.
• Credit Card: Using a credit card, your issuing bank may classify the transaction as a “cash advance.”

Important Note: What Are Cash Advance Fees? A cash advance involves using a credit card to withdraw cash or perform cash-like transactions. Banks typically charge a fixed fee or a percentage of the transaction amount (whichever is higher). More critically, cash advance interest usually starts accruing from the transaction date with no grace period. These fees are charged by your bank, not Remitly.

In addition to bank fees, transfer costs include the hidden portion in the exchange rate. For example, according to Wise currency experts, Remitly’s exchange rate markup for the USD to INR route ranges from 0.4% to 1.4%. This markup varies based on market fluctuations and transfer amounts.

To make the differences clearer, refer to the table below:

Speed Comparison: Which Is Faster?

In terms of speed, there’s little difference between credit and debit cards. Both are electronic payments, allowing Remitly to receive your payment instantly and begin processing the transfer.

The real factor affecting the speed of funds arrival is the “Delivery Speed” option you choose, not the card type. Remitly typically offers two options:

• Express: Higher fees, but funds typically arrive within minutes.
• Economy: Lower fees, but funds take 3-5 business days to arrive.

Thus, if speed is your priority, choosing the Express service is key, regardless of whether you use a credit or debit card.

Convenience and Transfer Limits

Convenience

Both card types offer great convenience; you simply enter your card details to complete the payment. However, credit cards may provide additional “benefits” in some cases.

Some credit card companies offer rewards for purchases, such as cashback or travel miles. You need to confirm with your card issuer (e.g., a licensed bank in Hong Kong) whether international transfers qualify for rewards. However, if the transaction is classified as a cash advance, you may not earn rewards and could incur additional fees.

Additionally, Remitly offers its own rewards program. For example, after becoming a Remitly One member, you can earn 1% cashback, up to $5 per month through specific actions (e.g., setting up autopay or funding the Remitly Wallet).

Transfer Limits

Remitly sets transfer limits based on your account verification status. Whether you use a credit or debit card, you must adhere to these limits.

• For new users who haven’t submitted identification documents, Remitly sets a lower initial limit.
• Depending on your country, this initial limit typically ranges from $2,999 to $5,000 per transaction.
• You can increase your transfer limit by submitting identity verification documents via the Remitly app or website.

In summary, debit cards are the preferred choice for most due to their cost-effectiveness. Credit cards offer greater payment flexibility but come with the risk of high cash advance fees.

Remitly Transfer: Complete Operation Guide

Image Source: unsplash

Now that you understand the differences between credit and debit cards, let’s dive into the operational steps. Whether you use Remitly’s mobile app or website, the process is very similar and designed to be simple and intuitive. Below is a complete step-by-step guide to completing a transfer.

Step 1: Add a New Payment Method

Before initiating a transfer, you can pre-add your bank card to your Remitly account for quicker payments later. Alternatively, you can add a card during the final step of initiating a transfer.

To add a new card, you need to prepare the following information:

• Card Number: The 16-digit number on the front of the card.
• Name on Card: Must match the name on your Remitly account exactly.
• Expiration Date: Typically in the format MM/YY.
• Security Code (CVV/CVC): The 3- or 4-digit number on the back of the card near the signature strip.

Important Rule: Name Must Match

For security, Remitly requires that the name on the credit or debit card used for payment matches the name on your Remitly profile exactly. If the names don’t match, the payment will fail.

Remitly widely accepts Visa and Mastercard globally. If you’re in the EU or UK, you can also use Maestro cards for payments.

Step 2: Initiate a New Transfer

After adding a payment method or preparing to add one during payment, you can start a new Remitly transfer. The process is clear and straightforward, requiring just a few steps.

1. Log In and Select Destination: First, log in to your Remitly account. On the main interface, select the country you want to send money to, then enter the amount you wish to send. The system will automatically display the current exchange rate, fees, and the amount the recipient will receive.
2. Choose Delivery Method: Depending on the recipient country’s support, you can select different delivery methods, such as bank deposit, cash pickup, or mobile wallet.
3. Enter Recipient Information: Accurately fill in the recipient’s details. This typically includes their full name, address, and contact phone number. For bank deposits, you’ll also need their bank account information.
4. Enter Sender Information: Confirm that your own information is accurate.
5. Review Transfer Details: Before proceeding to payment, the system will display a complete summary page. Carefully review all details, including the amount, fees, and recipient information.

Step 3: Select Card and Confirm Payment

This is the final step to complete the transfer. After confirming all transfer details, you’ll proceed to the payment page.

• Select Payment Card: You’ll see a list of payment methods. You can choose a card already saved in your account.
• Add a New Card: If you haven’t saved a card, you can select “Add a new credit/debit card” and enter the card details.
• Confirm and Pay: After selecting the card, click the confirm button. Remitly will process your payment and begin handling your Remitly transfer transaction.

Final Check: Before clicking the final “Confirm Payment” button, double-check all details. Once the transaction is submitted, modifying information may be difficult. After confirming everything is correct, you can confidently complete the payment.

After a successful payment, you’ll receive a confirmation email and can track your transfer status in real-time on the Remitly app or website.

Fees, Security, and Common Issues

Having understood the operational steps, you also need to focus on fee details, security measures, and potential issues during the transfer process. This will help you make informed decisions and complete each transfer smoothly.

Key Fee Breakdown

The total cost of a transfer consists of multiple components. First are the fees charged by Remitly itself, which typically depend on the delivery speed you choose:

• Express: Higher fees, but funds typically arrive within minutes.
• Economy: Lower fees, but funds take 3-5 business days to arrive.

Beware of Credit Card “Cash Advance” Fees

When using a credit card, your issuing bank (e.g., a licensed bank in Hong Kong) is likely to classify the transaction as a “cash advance.” This means the bank may charge an additional fee, typically 3% to 6% of the transaction amount or a fixed $10 fee (whichever is higher). More importantly, interest on this advance starts accruing from the transaction date, with an APR potentially as high as 29.99%, with no grace period.

These fees are charged by your bank, not Remitly. Therefore, before using a credit card, confirm your bank’s policies to avoid unexpected high costs.

Remitly Security Measures

The security of your funds is central to international transfers. Remitly implements multiple measures to protect your account and funds.

First, Remitly is a highly regulated financial service provider. It is registered with the U.S. Treasury Department and holds valid money transmission licenses in various U.S. states, ensuring its operations are compliant and transparent.

On the technical side, Remitly uses robust encryption standards (such as TLS and AES-256) to protect your personal and payment information, preventing data theft during transmission. Additionally, Remitly offers two-factor authentication (2FA). When 2FA is enabled, each login requires not only your password (something you know) but also a one-time code sent to your phone (something you have), adding a strong security layer to your account.

Common Reasons for Payment Failures

Sometimes, your payment may fail. Understanding common reasons can help you resolve issues quickly. The three main reasons are:

1. Insufficient Funds: Your debit card’s linked bank account has insufficient balance, or your credit card’s available credit is not enough.
2. Incorrect Card Details: The card number, expiration date, or CVV code you entered is incorrect.
3. Bank Blocking the Transaction: For security reasons, your issuing bank may temporarily block the international transaction.

If your Remitly transfer transaction fails due to a bank block, the most direct solution is to contact your issuing bank immediately. You can call the customer service number on the back of your card, explain the situation, and authorize the transaction.

On Remitly, debit cards are typically the most cost-effective choice because they help you avoid cash advance fees. Credit cards offer payment flexibility but require caution due to potential additional costs.

Both methods are fast and convenient. Your final choice depends on your personal balance of cost and flexibility.

Now, you can use the information in this guide, check your bank’s policies, and confidently complete your next transfer.

FAQ

Can I Use a Prepaid Card?

Typically, you cannot use a prepaid card. Remitly requires the use of a credit or debit card that matches the name on your account. This is to comply with financial regulations and ensure transaction security. Please use a bank card in your name for payments.

How Can I Completely Avoid Cash Advance Fees?

The simplest way is to always use a debit card for payments. Debit cards deduct funds directly from your bank account, and the transaction is treated like a purchase rather than a withdrawal, so no cash advance fees are incurred. This is the most cost-effective option.

Why Is My Transfer Limit Low?

New users typically have lower initial limits. You can increase your limit by submitting identity verification documents through the Remitly app or website. After verification, your daily and monthly transfer limits will significantly increase.

What Should I Do If My Card Is Declined?

First, check that your card details and account funds are correct. If everything is accurate, contact your issuing bank (e.g., a licensed bank in Hong Kong) immediately. Sometimes banks block international transactions for security reasons, and you need to authorize the payment with them.