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Cash advance is one of the most misunderstood concepts in the world of borrowing, but it is also one of the most powerful tools if you know how to use it properly. Credit, on the other hand, is simple to understand and is used by millions, if not billions of people around the world with great success. Therefore, it is easiest to learn about the former through the lens of the latter, and with that said, here are three ways credit and cash advance differ, and how each of these differences can help you. 

Where You Can Use Them

The biggest difference between credit and cash advance is where you can use each. Credit cards can, obviously, only be used at places that take "plastic," and this is because these places (stores, restaurants, gas stations, etc.) pay a variety of fees to the entity who is paying for the good or service up front, and who you will in turn pay back over time. With a cash advance, this middle man is gone, so you have to make up those fees yourself, which makes them expensive--but the benefit is that you can use that money anywhere you'd like, which is good for paying back friends and family from a credit card. 

Limits

When you first get a credit card, the biggest difference between your credit and cash advance stipulations will probably be your limits. Your cash advance limit is usually drastically smaller than your credit limit. The reasons for this difference may vary, but the bottom line is that most credit card companies don't want you taking out credit in the form of cash. Instead, taking out a cash advance might require sourcing money from somewhere else, but keeping good track of this money is crucial so that it doesn't get out of hand. Using a spreadsheet or reminder system will allow you to always have cash on hand without being confined to a measly cash advance limit. 

Credit Score

Lastly, your credit purchases and cash advances have different effects on your credit score, but since cash advance is a form of credit, the similarities are fairly subtle. A cash advance will not affect your credit score in and of itself, but it will raise the balance on your credit card just like a normal purchase would. Also, the APR on a cash advance is almost always higher than on a regular credit card purchase, so paying back a cash advance should be your first priority for the sake of your credit score.