Cash advance on one card, balance transfer to another?

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drbingo1987
 
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Cash advance on one card, balance transfer to another?

Postby drbingo1987 » Tue Jun 14, 2016 7:02 am

I have a 0% APR (2 yrs) balance transfer deal on one of my cards with a low transfer fee.
Is it be possible to take a cash advance on a different card then use the balance transfer offer to pay off that card?
Essentially it would serve as a 2 year personal loan at a very low rate. Am I missing a reason why this would be a bad idea?


MemberSince99
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Re: Cash advance on one card, balance transfer to another?

Postby MemberSince99 » Tue Jun 14, 2016 12:25 pm

Yes but you will pay interest at a high rate on the cash advance from day one until the balance is transferred and then any balance transfer fees

takeshi
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Re: Cash advance on one card, balance transfer to another?

Postby takeshi » Tue Jun 14, 2016 2:38 pm

Sure, it's possible. The cash advance doesn't prevent you from performing a balance transfer.

drbingo1987 wrote:Am I missing a reason why this would be a bad idea?

Make sure you're considering the BT fees, as well as the terms of the BT and the terms of the card you're using for a cash advance. A cash advance can be a red flag to creditors but the amount of the advance and the shape of your credit profile will also play a role in that. You also need to be aware of the impact to revolving utilization on both cards. if you're going to take 2 years to pay it off then be very careful with the revolving utilization. Short term high utilization generally isn't an issue (though some do see adverse action from sudden utilization spikes) but long term high utilization can lead to adverse action. You don't want to leave the card you're BT'ing to at high utilization for a long time like that.

Generally speaking, it's also a bad idea to incur debt but it's something that many of use deal with for one reason or another. An actual loan won't have the same negative impact as you'd see from borrowing the same amount from a credit card since balance to loan ratio on installments doesn't have as much impact as revolving utilization.

Instead of relying on oversimplifications such as "good" and "bad" you need to carefully consider everything. One person could do this with no issue. Another could do so and end up in trouble. It's not just a matter of the action itself.



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