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How to make large purchases using a credit card

Rack up rewards points or simply give yourself more time to pay off your balance when you make a large purchase on your credit card.

If you’re considering buying furniture, appliances or expensive jewelry, and you don’t have enough savings to outright cover the costs, you may have looked into in-store financing options. While in-store loans are convenient, they’re often not the best deal out there.

If you’re considering using your credit card to make a large purchase, read on to find out more.

Using a credit card for large purchases

If you’re planning to make a purchase that costs more than a month’s salary, one of the biggest advantages of using a credit card includes the ability to rack up a large number of rewards points or receive a chunk in cash back. However, before you hand over your card, you’ll want to make sure you’re able to pay off your balance as quickly as possible.

What is considered to be a large purchase?

A large credit card purchase isn’t how much the dollar amount adds up to, it is actually determined by your debt to credit limit ratio. For example, if your credit card limit is $5,000 and you’ve charged $4,000 to it, you’ve used 80% of your available credit line. Swiping for anything over 50% of your credit limit is considered a big purchase, with some people even arguing that anything over 20% is a big purchase.

Requesting a credit limit increase

Having a good or excellent credit score – usually of 650 or higher – can give you enough leverage to simply request a credit limit increase. If you’re happy with your current credit card but the limit is not high enough to make your big purchase, you can consider asking the provider to increase your credit limit permanently.

You can usually request a credit limit increase one of three ways:

  • Online. Sign in to your online banking and request a credit card limit increase. You will usually need to navigate to your credit card account, click on “Manage my account” (or similar) and then follow the steps to request a credit limit increase.
  • By phone. Call your provider and speak to a representative.
  • In person. If your credit card provider has physical locations, you can request a credit limit increase in person at a branch.

Compare high-limit credit cards

Providers rarely share credit limit ranges for their cards. Even when they do state a maximum, there’s no guarantee that you’ll get it when you apply. If you’re hoping for a high credit limit, you may want to take a look at the following credit cards.

Name Product Purchase Interest Rate Annual Fee Minimum Credit Limit Maximum Credit Limit Reward
Scotiabank Value Visa Card
Save on interest for 6 months by consolidating your higher-rate balances with the balance transfer offer, and get an on-going 12.99% interest rate on purchases, cash advances and balance transfers.
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by July 1, 2021.
Refresh Financial Secured Card
The Refresh Secured Card has no credit check, a low annual fee and guaranteed approval once you secure your card with anywhere from $200 - $10,000.
Take advantage of a low annual fee, with no credit check and guaranteed approval once you secure your card with some funds.
Home Trust Secured Visa
14.90% - 19.99%
Improve your credit score and make purchases with the Home Trust Secured Visa. Choose between paying no annual fee or low interest.
Choose from three card options: No Annual Fee ($0 annual fee, 19.99% purchase rate), Low Interest Rate ($59 annual fee, 14.90% purchase rate) or a Low Monthly Fee ($5 monthly fee, 14.90% purchase rate).
Scotia Momentum No-Fee Visa Card
7.99% intro APR for the first 6 months, 19.99% thereafter
Get 1% cash back on all eligible gas station, grocery store and drug store purchases and recurring bill payments, and get 0.5% cash back on all other eligible purchases.
Earn 5% cash back on all purchases for the first 3 months (up to $2,000 in total purchases).Plus, get a 7.99% introductory interest rate on all eligible purchases for the first 6 months. Apply by July 1, 2021.
Scotia Momentum Mastercard
7.99% intro APR for the first 6 months, 20.99% thereafter
Get 1% cash back on all eligible gas station, grocery store and drug store purchases and recurring bill payments, and get 0.5% cash back on all other eligible purchases.
Get a 7.99% introductory interest rate on all eligible purchases for the first 6 months. Apply by July 1, 2021.
Scotia Momentum Visa Infinite Card
$0 annual fee for the first year ($120 thereafter)
Earn 4% cash back for every $1 spent on eligible grocery purchases & recurring bill payments, 2% per $1 spent on eligible gas purchases & public transit, and 1% per $1 spent on all other eligible purchases.
Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases) and pay no annual fee in the first year, including on supplementary cards (A welcome offer value of $350). Apply by August 31, 2021.
Scotiabank SCENE Visa Card
Earn 5 SCENE points per $1 spent at participating Cineplex theatres or, and earn 1 SCENE point per $1 spent on eligible purchases elsewhere.
Earn 2,500 bonus SCENE points when you spend a minimum of $500 on eligible purchases in the first three months as a new SCENE Visa cardholder. Apply by July 1, 2021.
Scotiabank Platinum American Express Card
Earn 4 Scotia Rewards points per $1 spent at eligible gas stations, grocery stores, and on dining and entertainment purchases, and earn 1 Scotia Rewards point for every $1 spent elsewhere.
Receive a bonus of 30,000 Scotia Rewards points upon first eligible purchase made within the first two months. Apply by July 1, 2021.
Scotiabank GM Visa Card
Earn 5% in GM Earnings on all eligible purchases on the first $5,000 annual spend, and 2% in GM Earnings on all eligible purchases thereafter.
Earn 5% in GM Earnings on all eligible purchases on the first $5,000 annual spend, and 2% thereafter.
Scotiabank American Express Card
Earn 1 Scotia Rewards point for every $1 spent on eligible purchases.
Earn 5,000 bonus Scotia Rewards points when you spend $500 on eligible purchases within the first 3 months. Apply by July 1, 2021.

Compare up to 4 providers

Everyone uses credit cards differently

Each person has a different use for a credit card — some swipe for emergencies only, while others use it everyday. No matter how you use a credit card, having a plan to pay off your balance in full when it’s due should be a priority for all cardholders.

Far too often, consumers just swipe their cards without thinking about how they will pay off the balance. So before using your credit card to pay for an expensive item, consider the benefits and the potential risks of doing so.

Using my credit card responsibly

Your credit card should only be used in a way that is financially responsible. If you know that you will not be able to consistently pay off your credit card bill each month, then switching to a cash system or exploring low interest rate loans could be better options for you. If you’re going to use your credit card for a big expense, be prepared to work diligently to pay off the balance as quickly as possible.

Save some cash with low interest rate credit cards

There are some credit cards out there that come with low interest rates. While low rates still tend to sit around 8-11%, you can use it to your advantage to buy something expensive and avoid excessive costs from higher interest rates.

To compare, typical credit card interest rates tend to sit around 19.99% for purchases.

Using my credit card to earn points or cash back

Your card may come with a great rewards program – for instance, allowing you to earn 1 point per $1 spent or 2% cash back on eligible purchases. Making a large purchase with a credit card that offers more points or cash back than others will help you reap the rewards further.

  • For cards with cash back, a $5,000 purchase with 1% cash back would be a $50 bonus.
  • For cards with rewards points, a $5,000 purchase with 1 point per dollar spent would earn you 5,000 points.
You can also buy big items using in-store FINANCING

In-store financing has become more favourable for larger purchases because it offers the customer a line of credit directly with the store and can have either little or no interest for a specified period of time. However, when the low or no interest rate period is up, you can often incur high interest charges and fees.

Things to consider when using a credit card

  • Use your credit card for a reason. You can use a specific credit card for a specific purpose. Some simply have better interest rates than others and will ultimately end up costing you less if you can’t pay your balance in full each month. Others can help you rack up points faster and use them toward statement credit or free flights.
  • Pay attention to annual fees. If you don’t use your card often, consider applying for a credit card with no annual fees. Why pay an annual fee for something that is going to sit in your wallet most of the time?
  • Take note of your credit limit. Since you’re looking to make a big purchase, your credit limit will be important. Some credit card providers will charge you a fee if you go over your credit limit, while others will not allow you to go over your limit at all.
  • Don’t forget enticing rewards. Don’t ignore enticing perks like rewards points and travel insurance coverage – use them to your advantage.

How does the interest-free grace period work?

Most credit cards come with an interest-free period, also known as a grace period. Usually between 21 and 44 days, the interest-free grace period is the time when your credit card balance does not start accruing interest until your next statement period. You get the entire grace period to pay off the balance, but when the balance is due, it will begin to accrue interest if you can’t pay in full.

Just don’t make the mistake of forgetting to pay off your bill in full before the interest-free period is up – no matter how tempted you might be to only make the minimum monthly payment.

What’s my credit limit?

A credit card has a spending limit on it. Someone who has a solid credit history and has responsibly used credit cards for quite some time will likely have a higher credit limit than someone who is a first-time credit card user or someone who has one but is hesitant to swipe. Your credit limit is based off of your creditworthiness – and it takes time to build.

You can check your credit limit by logging into your online banking and navigating to your credit card account. Your limit should be listed near the top. If you can’t find it, you can call your provider and ask or visit your local branch.

Extending my credit limit

Credit limits can be extended for larger purchases, but this is something that is at the discretion of the provider. Multiple factors are taken into consideration when deciding if you can take on a higher credit limit such as your repayment history, your current income, your job status and how long you have been a valued cardholder.

Protection for shoppers

Extended warranty

Some credit cards allow you to extend the warranty of the items you buy. Extended warranties are offered by most of the major card providers and are typically a complimentary service that will reimburse you if something organically backfires with your purchase — you obviously can’t ruin your purchase with abnormal wear and tear and ask for your money back!

Be sure to file your receipts and warranties for larger purchases to save yourself time in the event that you’d have to make a claim. Not every purchase will be covered by the warranty set in place by the credit card company, so read the fine print and figure out if you’re better off paying a little extra for the store warranty.

Purchase protection

Some credit cards also offer purchase protection when you use the card to buy your personal items. This means that you have additional coverage if there is any problem with the item within a set timeframe of the purchase.

Switching to another credit card with better features

Even if your credit card has worked well in the past, you should still keep an eye out for a card that has promotions or perks that could be financially beneficial to you now. Big purchases can lead to big rewards, cash back or travel rewards miles. You could even find a card with lower fees or transfer your debt to a card with a better interest rate.

As you can see, there are several innovative ways that a credit card may be used to purchase your expensive items. If you’re creative enough, you can make a large purchase and avoid paying a single cent in interest.

Tips for using my credit card for large purchases

  • Promotional periods: While they can be hard to find on the Canadian market, there are occasionally a couple of offers that provide low interest rates for a set period of time. Or, you can simply apply for a low interest rate credit card – and make use of a low rate for the life of the card.
  • Extended warranties, insurance and special discounts. The extended warranty gives you an extension on the manufacturers warranty, protecting your initial investment. There are other kinds of purchase insurance that protect your item from loss, theft or damage. These protections make it a no-brainer to use your card for a valuable purchase.
  • Look into a balance transfer. If didn’t have time to get a low rate card before you made your purchase, you can still take advantage of low interest rates by doing a balance transfer. This is when you move your debt from one card to a new card that has a lower interest rate. Watch out for high balance transfer fees though.
    Compare balance transfer credit cards

Frequently asked questions

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