How to Use a Credit Card for a Large Purchase

Holly Johnson

May 26, 2017  •  2 Minute Read

Credit Cards

If you have a large purchase coming up and don’t have the cash, you have myriad options at your disposal. You could spend months saving small sums to reach your goal, or you could take out a personal loan. If neither of those options seem appealing, you could sign up for a new credit card instead.

While credit cards get a bad rap, they are almost always a better deal than personal loans. Not only can you apply for a credit card online (instead of visiting a bank), but some cards offer flexible terms, no added fees, and low interest rates, too.

Whether you plan to remodel your kitchen, need to buy new appliances, owe money for your child’s braces, or have a pricey home repair to deal with, some credit cards are ideal for handling large expenses.

How to Use a Credit Card for a Large Purchase

Any of the cards on this list can help you save money on interest when making a large purchase. Some even offer rewards, which can serve as icing on the cake.

But, that doesn’t mean this strategy is foolproof. If you want to make credit work for you and not against you, make sure to follow these tips:

Have a plan for when your APR resets.

While scoring 0 percent APR is a huge advantage, it’s too good to last. Cards that offer this perk only do so for 12-21 months. Once your introductory offer is over, your card’s APR will reset to a regular rate.

If you don’t want to pay a lot of interest on your large purchase, try to pay your balance off before the introductory offer ends. At the very least, pay down as much as you can so you’re not stuck making huge interest payments for several months.

Only charge what you can afford to repay.

Credit cards offer the prospect of something for nothing. By charging your purchases instead of paying cash, you can get away with making small payments for years.

However, it’s crucial to remember that the chickens eventually come home to roost. You’ll need to repay every penny you charge eventually, plus interest and fees.

Don’t use rewards as an excuse to overspend.

While some of the best cards for a large purchase offer ongoing rewards and signup bonuses, it’s important to see those perks for what they are – an incentive to spend more.

While there’s nothing wrong with enjoying a little cash back, it’s important to understand that, if you carry a balance, the interest you’ll pay will wipe out the rewards you earn. Most of the time, it’s simple math; paying 15 percent APR to earn 1-2 percent cash back doesn’t make sense.

Final Thoughts

Planning to use credit for a large purchase? Make sure to compare offers, do the math, and set yourself up for success. While a credit card can help you make a large purchase without paying interest, using credit without a plan is rarely a good idea.