Your credit card company's customer service rep may tell you what your total balance is - after all, that's what you ask for whenever you call, right? However, the total balance is actually the sum of several types of balances. Why is this piece of information significant, you ask?
The truth is, different balances merit different interest rates. That's right; a certain type of balance may have a much higher interest rate than another type of credit card balance. If you know the different types of balances, then you'll know which type of balance will get you levied a very high interest rate and thus you will know which type of balance you should avoid.
The Purchase Balance - The purchase balance is the most common type of credit card balance. Simply speaking, it is the sum of the purchases you have made using your card. This includes purchases made with your card present (when you swipe or "wave" your card in the supermarket or store), and those purchases you have made through the phone or through the internet.
The purchase balance is accumulated when you use your card to buy something, period. When your credit card company talks about "standard APR," they are talking about the interest rate that applies to the purchase balance.
The Balance Transfer Balance - You will have a balance transfer balance on your credit card if you process a balance transfer - that is, if you have used your credit card to pay off your loans or balances on other credit cards and have thereby transferred those loans and balances on to your credit card. The loans and balances transferred are not considered as purchase balance because they are not card purchases (obviously). Balance transfer balances have their own Annual Percentage Rate (APR) or interest rate; the interest rate that applies to the purchase balance does not necessarily apply to balance transfer balances.
Balance transfer balances usually get special rates - especially if you get them on a promo. However, they may be the same if you do a balance transfer under normal circumstances (i.e. there's no balance transfer promo). Learn more about balance transfers by reading this post about balance transfers.
The Cash Advance Balance - The cash advance balance is the balance that is accumulated through cash withdrawals. In other words, if you use your card at an ATM or if you go to the bank to withdraw some cash from your credit card account, the amount you withdraw will be put on you cash advance balance - not on the purchase balance. If you use a balance transfer check (balance transfer check is something that you get from your credit card company to pay off your debts and transfer such balances to your credit card account) to pay yourself (you use your name or the term "cash" on the "pay to" portion), that will be considered as a cash withdrawal and will also be placed on the cash advance portion of your account.
The cash advance balance typically has the most punitive interest rate of all credit card balances. Thus, it is best to use your cash advance privileges sparingly.
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