What's the Difference Between a Balance Transfer and a Cash Advance?

A cash advance and a balance transfer both allow credit card customers to access their credit lines for cold hard cash.

Although they seem very much the same, it is imperative for cardholders to know the differences in order to save money on interest charges.

In the match-up cash advance vs balance transfer, you will be incurring more credit card debt but one of them is lesser of the two evils.

Quick answer: A cash advance puts cash in your hands while a balance transfer is usually a transfer of debt from one card to another.

Cash Advances

Cash advances are similar to making ATM withdrawals, except with your credit card.

To get a cash advance, you simply insert your credit card into any ATM and withdraw the desired amount of cash. The amount withdrawn will be added to your credit card balance plus any cash advance fees stated in your card’s terms and disclosures.

Common advice from personal finance experts warns against the use of cash advances because it is very costly and resembles the dreaded payday loan.

Balance Transfers

A balance transfer is intended for moving the balance from one credit card to another, or paying a credit card with another credit card.

You have to request a balance transfer where the credit card company can send you a check, or pay another credit card directly for the amount requested. There is also a fee imposed for a balance transfer.

If you requested a balance transfer check, the check is no different from any other check. You can cash it and do whatever you want with the money.

Some people choose to use the balance transfer for other purposes such as shopping or investing. Remember that the source of funds comes from your credit card, which is subject to interest charges.

Key Differences

The three major differences between cash advances and balance transfers are usage, interest rates, and transaction fees.

A cash advance is typically used in desperate situations where cash is needed immediately. A balance transfer must be requested, consumers should have an idea beforehand of how they plan to use the money.

Cash advances generally have higher APRs and transaction fees than balance transfers.

For many credit cards, a balance transfer APR is the same as an APR for purchases. If you are looking to obtain some cash from your credit line, the cheaper option would be a balance transfer request.

Check out other popular balance transfer credit cards available.

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Ask a Question

Sunday, 13 Oct 2019 1:41 AM
<p>Thank you. Finally, a clear explanation.</p>
Thursday, 04 Jan 2018 10:30 PM
<p>Val K, yes, a balance transfer can be deposited into your checking account. It will not be coded as a cash advance -- Citi makes that very clear in their offers.</p><p>Going through the trouble of filling in the information for the payees could be the best option because 1) it would be faster as the balance is paid directly and 2) it removes temptation that those funds be used for something else.</p>
Thursday, 04 Jan 2018 6:24 PM
<p>I am going to use a 0% APR transfer special to pay off 3 things. The card I am using to do this says i can also direct deposit into my checking as part of the special. It is Citi Double Cash... Is this legit? It is just easier to send the money to my checking and then directly pay the 3 things vs. having to fill out the info on the 3 things individually through Citi. I just want to make sure this is wise or if I should just take the longer route? It seems fine, but I have never transferred, so want to make sure I am reading it correct, as to me direct deposit is pretty much sounds like a cash advance which scares me because I am using it strictly to pay these 3 items. The exact wording online is</p><p>"0% Promo APR for 18 months <br>After that 20.74% <br>Variable APR applies on Balance Transfers including direct deposits"</p><p>Thanks!</p>