How to make a large purchase using a credit card | finder.com
How to make large purchases using a credit card

How to make large purchases using a credit card

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

If you are considering buying furniture, appliances, or jewelry you have probably looked at the in-store financing options. While these are convenient, it is possible that you can get a better deal by using a major credit card to make your purchase.

Using credit cards for large purchases

If you’re planning to make a purchase that costs more than a month’s salary, a few of the advantages of using a credit card include the ability to bank a large number of reward points. But – you’ll want to stick to some rules of thumb, which we’ll outline in this guide.

What exactly 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 your debt to credit limit ratio. If your credit card limit is $5,000 and you’ve charged $4,000, you’ve used 80% of your available line. Swiping for anything over 50% of your credit limit is considered a big purchase, some people even argue that it is 20%.

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Everyone uses credit cards differently

Each person has different use for a credit card — some swipe for emergencies only and others use it quite often. No matter how you use a credit card, having a plan to pay off the balance when it is due should be a common denominator for all cardholders.

Far too often, consumers just swipe their cards without thinking about how they will pay off the balance. So, when using a 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 bill each month then switching to a cash system or exploring low interest loans is probably better for you. Keep those cards for big expenses only and work diligently to pay off the balance as quickly as possible.

Save some cash with low interest rates

There are some cards out there that come with an introductory low interest rate. When the rate is low or nonexistent, you can use it to your advantage to buy something expensive and avoid excessive cost from interest fees.

Using my credit card to earn points

Your card may come with a great rewards program – for instance, 2 miles for every dollar spent such as with the Barclaycard Arrival Plus Elite World Mastercard. Making a large purchase with a card with double miles will get you – well, double miles!

For cards with cash back offers, a $5,000 purchase with 1% cash back would be a $50 bonus.

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.

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You can also buy big items using an in-store loan

In-store loans have become more favorable for larger purchases because it offers the customer a line of credit directly with the store and can have either little or no interest.

Things to consider when using a credit card

There are a number of different reasons to use a specific card for a specific purpose. Some simply have better interest rates than others and will ultimately end up costing you less if you can pay your balance on time. Also, pay attention to cards with no annual fees. If you’re not a chronic credit card user, why would you want to pay to use one in the first place?

Speaking of spending, your credit limit is very important to take note of, as this is the varying factor that will determine the amount of money you’re able to use.

Wake up! Don’t sleep on cards that offer enticing perks like reward points and travel insurance, use them to your advantage. Defineitly shop around and carefully eyeball the terms and conditions for any card you are considering, as there could be hidden fees in the contract.

How does the interest free period work?

Most credit cards come with interest free periods, which means when you make a purchase, it does not start accruing interest until your next statement period. You get the whole month to pay off the balance, but when the balance is due, it will 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.

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 high credit limit. If you’re someone who is a first-time credit card user or someone who has one but is hesitant to swipe, it is rare that you’ll have a high credit limit. The limit is based off of your creditworthiness and it takes time to build.

Extending my credit limit

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

Protection for shoppers

Even though it is common for stores to sell their items with a warranty for a limited period of time, with the use of your credit card, you’ll be able to extend this period even more. Extended warranties are offered by most of the major card lenders 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 sure to file your receipts and warranties for larger purchases to save yourself time in the event that you’d have to make 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.

Switching to another credit card with better features

Just because a card has treated you well in the past, you should still keep an eye out for a card that has promotions or perks that could be financially beneficial for you. Big purchases could lead to big rewards, cash back or frequent flyer miles. You could even find a card with lower fees or transfer your balance to a card with a better interest rate. Saving money? Sign me up!

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 never pay a cent in interest.

Large purchases and my credit score

Your credit score is based on a number of factors, one being your debt to limit ratio or how high your balance is in relation to your credit limit. If you plan to make a large purchase with your card, be careful as this will raise your debt to limit ratio and possibly have a negative effect on your score. All the more reason to pay off the balance in full by the due date.

Compare credit cards

Updated October 16th, 2018
Name Product Credit Score Min. Annual Fee Intro Balance Transfer APR Reward Value per Dollar Secured or Unsecured Annual Fee APR for Purchases (Purchase Rate) Intro APR for Balance Transfer
680
95
0%
1
Unsecured
$95
14.99% to 25.99% variable
0% for the first 12 months (then 14.99% to 25.99% variable)
Earn $200 bonus cash back after you spend $1,000 on purchases in the first 3 months. Rates & Fees
680
0%
1
Unsecured
$0
14.99% to 25.99% variable
0% for the first 15 months (then 14.99% to 25.99% variable)
Earn a $150 bonus statement credit after you spend $1,000 on purchases in the first 3 months. Rates & Fees
680
550
1
Unsecured
$550
None (Charge Card)
Get 5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel and 5X points on eligible hotels booked on amextravel.com. Rates & Fees
680
0%
1.5
Unsecured
$0
14.99% to 25.99% variable
0% for the first 15 months (then 14.99% to 25.99% variable)
Earn up to $250 back. Earn $150 back after you spend $1,000 or more in purchases with your new Card within the first 3 months of Card Membership. Plus, earn an additional $100 back after you spend an additional $6,500 in purchases within your first 12 months. You will receive the cash back in the form of a statement credit. Rates & Fees
720
0%
Unsecured
$0
13.99% variable
0% for the first 15 months (then to variable)
A low, variable APR on purchases, balance transfers and cash advances.
680
0%
1.5
Unsecured
$0
14.74%, 18.74% or 24.74% variable
0% for the first 15 months (then 14.74%, 18.74% or 24.74% variable)
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees.
680
0%
Unsecured
$0
12.74%, 16.74% or 20.74% variable
0% for the first 18 months (then 12.74%, 16.74% or 20.74% variable)
An 18-month 0% Intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
680
1
Unsecured
$0
17.74% to 26.74% variable
Earn 10,000 Bonus Miles after spending $500 in purchases on your new Card in your first 3 months of Card Membership. Rates & Fees
680
95
1
Unsecured
$0 annual fee for the first year ($95 thereafter)
17.74% to 26.74% variable
30,000 bonus miles after you use your new card to make $1,000 on purchases within the first 3 months. Rates & Fees
680
95
2
Unsecured
$0 annual fee for the first year ($95 thereafter)
17.74% to 26.74% variable
Enjoy a $0 annual fee on the first year and earn up to 2 Starpoints® for every dollar of eligible purchases. Rates & Fees
680
95
3
Unsecured
$95
17.74% to 26.74% variable
Earn 125,000 Hilton Honors™ Bonus Points after you spend $2,000 or more in purchases with your new Card within the first 3 months of Card Membership. Rates & Fees
680
3
Unsecured
$0
17.74% to 26.74% variable
Earn 75,000 Hilton Honors™ Bonus Points after you spend $1,000 in purchases on the Card within your first 3 months of Card Membership. Rates & Fees
715
495
0%
1
Unsecured
$495
16.99% variable
0% for the first 15 billing cycles (then to variable)
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
195
0%
1
Unsecured
$195
16.99% variable
0% for the first 15 billing cycles (then to variable)
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
715
995
0%
2
Unsecured
$995
16.99% variable
0% for the first 15 billing cycles (then 16.99% variable)
Earn points every time you spend. Luxury Card enhances your purchasing power by providing you with one (1) point for every one dollar ($1) you spend. Every purchase gets you closer to the rewards you want.
620
39
Unsecured
$39
24.99% variable
Designed to help build credit history with no deposit required and access to benefits.
620
99
Unsecured
$75 annual fee for the first year ($99 thereafter)
23.9% variable
With this card you get a 23.9% Variable APR.
300
48
0%
Unsecured
$75 annual fee for the first year ($48 thereafter)
29.99% variable
The First Access Card is a true VISA® credit card that does not require perfect credit for approval.
300
Unsecured
Up to
19.74% to 25.74% variable
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
720
0%
1
Unsecured
$0
14.99% to 24.99% variable
0% for the first 12 statement closing dates (then 14.99% to 24.99% variable)
Earn more cash back for the things you buy most.
720
95
1
Unsecured
$0 annual fee for the first year ($95 thereafter)
17.74% to 24.74% variable
Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
720
450
1
Unsecured
$450
17.74% to 24.74% variable
Earn 50,000 BONUS POINTS after spending $4,000 on purchases in the first 3 months from account opening* — that's $750 toward travel when you redeem through Chase Ultimate Rewards®.
690
0%
1.5
Unsecured
$0
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
Earn unlimited 1.5% cash back on every purchase - it's automatic. No minimum to redeem for cash back.
680
95
1.5
Unsecured
$95
17.74% to 24.74% variable
Earn unlimited 2 points for every $1 spent on travel and dining purchases and 1.5 points for every $1 spent on all other purchases.
690
0%
1.5
Unsecured
$0
14.74%, 20.74% or 24.74% variable
0% for the first 15 months (then 14.74%, 20.74% or 24.74% variable)
Earn unlimited 1.5% cash back on every purchase, every day
690
0%
1
Unsecured
$0
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
Earn 5% Cash back in bonus categories up to $1,500 every quarter. Earn 1% Cash back on all other purchases.
680
1.5
Unsecured
$0
16.74% to 24.74% variable
for the first 12 months (then 16.74% to 24.74% variable)
An intro offer rewards cardholders with a $250 value (25,000 online bonus points) after spending $1,000 within the first 90 days of account opening
680
0%
Unsecured
$0
16.74% to 25.49% variable
0% for the first 15 months (then 16.74% to 25.49% variable)
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
750
95
2
Unsecured
$0 annual fee for the first year ($95 thereafter)
13.74%, 19.74% or 23.74% variable

Compare up to 4 providers

Tips for using my credit card for large purchases

Promotional periods: Companies want your business, so they are willing to make all kinds of offers in order to secure you as their loyal customer. Most cards have interest free periods that allow you to buy an item and pay off the card before you attract additional interest.
Compare interest-free credit cards
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.

Find low interest offers. Some cards offer a zero percent introductory interest rate that lets you finance your purchases for free. If you are going this route, make sure you can pay off all or most of the purchase before the low rate expires so you can maximize savings.
Compare low interest credit cards
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 rates by doing a balance transfer. This is when you move the debt from one card to a new card for a lower interest rate.
Compare balance transfer credit cards

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Kyle Morgan

Kyle Morgan is a producer for finder.com who has worked for the USA Today network and Relix magazine, among other publications. He can be found writing about everything from the latest car loan stats to tips on saving money when traveling overseas. He lives in Asbury Park, where he loves exploring new places and sipping on hoppy beer. Oh, and he doesn't discriminate against buffalo wings — grilled or fried are just fine.

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Deserve® Classic Card
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24.49
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Luxury Card Mastercard® Gold Card™
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