When to Use a Credit Card for Big Purchases

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Using credit cards to pay for big purchases could be a good idea when you'll earn rewards, want to qualify for an intro bonus, have a promotional rate or your card offers purchase benefits.

It may also be the best option if you need to deal with an emergency you can't afford to pay for all at once. While ideally, an emergency fund could help you cover these expenses, using a credit card is often an easier and less expensive alternative to taking out an emergency loan.

If you're planning a large purchase, or worry one may pop up unexpectedly, make sure you understand when using a credit card is best and how using your credit card can impact your credit scores.

How Using a Credit Card for Large Purchases Affects Your Credit

The amount you earn or spend on your credit cards doesn't directly impact your credit scores. What matters is how close you get to the credit limit on each one of your cards, even if the dollar amount is relatively low.

The amount of credit you use relative to your card's limit is called your credit utilization ratio, and it's the second most important credit scoring factor. Using a large portion of your credit limit—or having a high utilization ratio—can hurt your scores, while using a small portion is best for your scores. For this reason, using your credit card to make a large purchase could hurt your credit if it increases your credit utilization ratio.

An important detail to remember is that the credit utilization calculation depends on what's on your credit report. Generally, credit card companies send an update to the credit bureaus around the end of your card's statement period, which is about three weeks before your bill's due date.

As a result, if using your card to make a large purchase brings you close to your credit limit, it will raise your utilization rate even if you pay your bill in full and on time. If you have the money available, you can avoid this by paying down your card's balance before the end of your statement period.

When Is It a Good Idea to Put a Big Purchase on a Credit Card?

Using a credit card for big purchases can be advantageous in different circumstances and for different reasons:

You'll Earn Rewards

Whether you have a cash back credit card or prefer travel rewards, using your credit card for a large purchase can be a good way to earn lots of rewards, as long as you have a plan for paying the bill. Even if you do have a plan, however, don't justify the purchase solely because it'll earn you rewards.

You Can Qualify for an Intro Bonus

Many rewards credit cards offer an intro or sign-up bonus you're eligible to earn if you use your new card to spend a certain amount of money during the first few months you have it. If you have a big purchase coming up, it could be a good time to apply for a new card that has a large sign-up bonus.

Your Card Has a Promotional Rate

Some credit cards offer a promotional interest rate, such as a 0% annual percentage rate (APR), during an introductory period. If your card has a promotional rate on purchases, you may want to use it for your large expenditure and then pay off the balance before you're charged interest. Have a plan for paying off the balance before the end of the promotional period, or the balance will start to accrue interest based on the card's standard APR.

Your Card Offers Purchase Protections or Benefits

Credit card issuers and networks offer a variety of benefits when you use your credit card to buy something. These may include:

These benefits apply to all eligible purchases, but can be particularly important for big purchases.

For example, if you buy a television that has a one-year manufacturer's warranty, your credit card may offer a free additional year of warranty coverage. You may also be able to get reimbursed if the retailer won't take a return or if the TV is damaged or stolen during the first few months of ownership.

When you use a credit card, you can also dispute a charge if the company doesn't provide the service or product you paid for. The credit card company may then be able to reimburse you for the purchase.

You're Dealing With an Emergency

Having a credit card for emergencies can also help you pay for large expenses right away. Whether you need to quickly buy a flight, pay for auto repairs or cover necessary bills while you're out of work, you could use a credit card and pay off the bill over time.

While credit cards tend to have high interest rates, you may wind up paying less than you would by taking out a personal loan if you have bad credit. And their high rates are still much lower than what you could expect with a payday loan or pawn loan. However, if you can, try to use a low rate credit card rather than a rewards credit card, as rewards cards commonly have higher interest rates.

Common Large Purchases to Make With a Credit Card

Because of these benefits, there are a few common purchases that people tend to use credit cards for:

  • Appliances and electronics: Card-issuer purchase protections can be particularly handy when you're buying expensive big-ticket items.
  • Hotel stays and airline tickets: A card's travel benefits only apply if you use the card to make applicable purchases, and travel rewards cards may offer bonus rewards on travel purchases.
  • Rental cars: The benefits when renting a car are the same as those for hotel stays and airline ticket purchases. Plus, some rental agencies require a credit check if you want to use a debit card.

Also keep in mind that frequent purchases can add up to become a major monthly expense. For example, people who tend to cook at home or have large families may wind up spending hundreds of dollars at grocery stores every month. A rewards credit card that offers bonus points at grocery stores could be a good fit.

When Not to Use a Credit Card for Big Purchases

Using a credit card for large purchases isn't always a good idea. A big impulse buy could lead to regret—and debt—later on, particularly when you're working to pay off credit card debt as your new purchases will start to accrue interest right away. Adding a new, big charge at this point can lead to paying more interest, which will make it more difficult to pay off your card.

If you're stuck and need to make the purchase, you may want to use your credit card for all the reasons listed above. But if you can go without, focus on paying down your credit card debt rather than adding to your balance.

You also don't want to use a credit card for large purchases if doing so will cause you to incur an extra fee. These convenience fees may be around 2% of the purchase price, which can be a significant amount on a large purchase.

Best Credit Cards for Big Purchases

The best card is going to depend on what you're purchasing, whether it's a new card and if you can pay off the balance in full or want to pay it off over time. Here are a few top picks:

Wells Fargo Platinum card

Apply

on Wells Fargo's website

Good - Exceptional

APR

16.49%-24.49% (Variable)

Intro APR

0% for 18 months from account opening on purchases and qualifying balance transfers

Rewards

None

Annual Fee

$0

Card Details
  • 0% intro APR for 18 months from account opening on purchases and qualifying balance transfers, then a 16.49% to 24.49% variable APR; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5
  • $0 Annual Fee
  • Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Platinum card
  • Easy access to your FICO® Credit Score with Wells Fargo Online®
  • Monitor your spending, purchases and any suspicious activity with text and email alerts and notifications
  • Convenient tools to help create a budget and manage your spending with My Money Map
  • Select "Apply Now" to learn more about the product features, terms and conditions
  • Matched For You are statements made by Experian and may not reflect Wells Fargo’s underwriting standards

Rates and Fees

The Wells Fargo Platinum card has an introductory 0% APR offer that allows you to make purchases or transfer balances and pay no interest for up to 18 months before the standard APR of 16.49% to 24.49% variable starts applying. Balance transfers made within 120 days of card opening qualify for the intro bonus rate and are charged a 3% balance transfer fee ($5) minimum; transfers made after 120 days pay the ongoing rate and a 5% fee ($5 minimum). It could be a good option if you need time to pay off the balance. Plus, there's no annual fee, so you can put all your money toward paying off your balance. The downside is you won't earn any rewards, but the savings from avoiding fees and interest can add up.

Capital One Quicksilver Cash Rewards Credit Card

Capital One Quicksilver Cash Rewards Credit Card

Apply

on Capital One's website

Good - Exceptional

Capital One Quicksilver Cash Rewards Credit Card

APR

14.99% - 24.99% (Variable)

Intro APR

0% on Purchases for 15 months

Rewards

1.5% cash back on All Purchases

Intro Bonus

One-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening

Annual Fee

$0

Card Details
  • One-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening
  • Earn unlimited 1.5% cash back on every purchase, every day
  • No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won't expire for the life of the account and there's no limit to how much you can earn
  • 0% intro APR on purchases for 15 months; 14.99%-24.99% variable APR after that
  • $0 annual fee and no foreign transaction fees

If you want to earn rewards and need some time to pay off your big purchase, consider the Capital One Quicksilver Cash Rewards Credit Card. New cardholders can qualify for a 200 intro bonus if they spend $500 within their first 3 months with the card. Additionally, you'll get 1.5% cash back on every purchase, large or small.

Chase Sapphire Preferred® Card

Chase Sapphire Preferred® Card

Apply

on Chase's website

Good - Exceptional

Chase Sapphire Preferred® Card

APR

15.99% - 22.99% Variable

Intro APR

N/A

Rewards

3X points on Dining

2X points on Travel

1X points on All Other Purchases

Intro Bonus

Our best offer ever! Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 when you redeem through Chase Ultimate Rewards®.

Annual Fee

$95

Card Details
  • Our best offer ever! Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 when you redeem through Chase Ultimate Rewards®.
  • Enjoy new benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining and 2X points on all other travel purchases, plus more.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 100,000 points are worth $1,250 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.

The Chase Sapphire Preferred® Card has a large intro bonus for new cardholders who haven't received a bonus on any Sapphire card in the past 48 months. The bonus is for 100,000 Chase Ultimate Rewards points if you use the card to make $4,000 worth of purchases within 3 months of opening your account. The points are worth $1,250 if you use them to book travel through Ultimate Rewards, or $600 if you redeem them for cash back.

Choose the Right Card for the Job

Picking the right card is most important when you're making large purchases. Differences between rewards programs, promotional rates, promotional periods, benefits and purchase protections will all factor into the rewards you'll earn or how much interest you can avoid paying.

If you think you might want a new card for your big purchases, you can quickly compare cards and current offers using Experian CreditMatchTM.

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