I think I see where the confusion is…. let me know if I’m not getting it right.

Here’s the thing about balance transfer cards…all they offer you is a temporary period to borrow interest free money for a certain period of time..usually 6-12 months. You can utilize the balance transfer funds to pay off your debts and not drown under the burden of high interest charges for the duration of your promotional period. Some people even try to make money for balance transfer by depositing the funds into a high interest savings account to earn free interest.
Once your promo period ends, you may be able to apply for yet another balance transfer card and keep rolling over the balance onto yet another 0% credit card.

But at the very end, while the balance transfer card has paid off all the other balances on your other cards for you, the balance transfer card itself still needs to be paid off after all the promotional periods end. If you temporarily shifted funds into a high interest account to earn some free interest, even that money must be withdrawn eventually to help pay off the balance transfer card. Of course the free interest you earned during the entire promotional rate period helps to reduce the final balance owed.

In the above example, let’s say you deposit the $5000 into a high interest account for 1 year for the length of the introductory rate. You’ve paid off your other card with funds from the balance transfer card. So now you have $5000 positive savings in your savings account and a $10000 owed liability in your $10000 credit limit 0% balance transfer card. The balance transfer card will give you breathing room to slowly pay the liability off over time, but eventually you still owe $5000 (the amount used to pay off that other old credit card you used to have. Of course, let’s say your $5000 bank account earns a lot of interest and increases to $5500. Now, at the end of the promo period, you only owe $4,500 on the balance transfer card.

No, because when you take the hypothetical $10,000 credit limit from the newly applied for 0% APR balance transfer credit card and use it to pay off the high interest APR $5,000 owed on another credit card, this $10,000 creates a positive credit balance of $5,000 on the high interest card. This positive balance can be withdrawn as a check and deposited into a high interest bank account to earn money. Of course, this creates a $10,000 owed balance on the 0% APR balance transfer credit card that must be paid back by the end of the promotional period.

Some card issuers like Citibank have a maximum total credit limit you can have with them. If you want to apply for additional promotional rate cards through them, usually they will require you reduce the credit limits on your other cards so that sufficient credit limit space can be freed up for a new introductory offer credit card.

Yes, every month you’ll have to pay the minimum balance off of your 0% card, but money will still be left over than can be earning bank interest. At the end of the promo period, you take the money from the bank, pay back the balance transfer card, and pocket the rest. That’s how you make money from balance transfer arbitrage in a nut shell.

The money you can make is obviously a lot better when interest rates are higher.

If you’re referring to my balance transfer funds, the bulk are residing in my high yield savings account earning interest. Yes, interest rates have dropped, but they are still earning something.

As for cash advance and balance transfer, their difference lies primarily in the fees and interest. Cash advances are what you would refer to those convenience checks that your credit card company keeps sending you. Cash advances also refer to the instant cash that you receive when using your credit card to withdraw money at an ATM machine. Because of this instant gratification type access to money, cash advances impose extremely high transaction fees and interest rates.

Balance transfers are a newer breed way to access your credit limit. They are designed to permit cardholders to transfer higher interest debt from another card onto the lower promotional interest balance transfer card.

To demonstrate: Let’s say you have two credit cards – Card #1 has the new 0% balance transfer offer, and Card #2 is just a regular credit card that you own.

If you attempt to transfer the balance of Credit Card #2 that already has a zero credit balance onto Card #1 (balance transfer), what happens is that Card #2 now will have a positive credit amount because Card #1’s credit limit has been used to essentially pay Card #2. The amount of this positive balance can be withdrawn by asking Card #2 issuer to send you a check for the credit balance. Meanwhile, the balance transfer amount will be carried on Card #1 for the duration of the promotional period.

Citibank credit cards make things even more convenient by allowing cardholders to simply request a balance transfer check made out to the cardholder without needing a separate credit card debt to transfer from. Thus in the above case, all you would need is a Citibank Card #1.