Best Credit Cards to Consider for Large Purchases
Whether your big expense is related to a wedding, a home renovation, or a home appliance on the fritz, if you are expecting a large expense in the near future, it makes more sense to use a new credit card rather than cash or a debit card. Typically, you can save on interest or take advantage of sign-up bonuses.
In this article, we will discuss some of the best cards for large purchases, how to choose the right credit card, and also the best ways to use your credit card for major purchases.
The Best Credit Cards to Consider Before Making Large Purchases and What They Offer
Credit Card Uses While Making Large Purchases
Whether it’s a new TV or an updated refrigerator, it’s always best to take your time while considering larger-than-usual purchases. Which payment method you choose to optimize should always be part of this consideration process. Let's explore the many reasons why you might want to use a credit card for these types of expenses.
Bonuses and Rewards
Using a credit card for large purchases is a great way to provide yourself the chance to earn rewards. Larger purchases allow you to maximize the purchasing power of your credit and spend more with ease.
And you get special rewards that can help you earn cash back, travel miles, or other valuable perks that you can use immediately or in the future. Some credit cards allow you to avoid interest charges if you pay off the balance within the introductory period.
Stronger Fraud Protection
When you utilize your card in making any large purchase, you are automatically eligible for zero liability on fraudulent charges. Therefore, the credit card issuer won't hold you responsible if someone steals your information and racks up fraudulent charges on your account.
In addition to zero liability protection, many credit cards offer enhanced security features such as chip technology and touch-free payments. These features make it harder for someone to steal your card information in stores, gas stations, or ATMs.
Easy Tracking and Limiting of Spending
We all have a lot of expenses, and it's easy to lose track of how much we've spent. Using a credit card for large purchases, as opposed to cash, is a great way to keep track of your spending.
You can easily track your spending over time without keeping track of receipts or manually recording the amounts. Additionally, using one credit card for all major expenses means that you'll have an easier time keeping track of all your recurring charges, like subscriptions and memberships.
Automatic Insurance Benefits
Many credit cards come loaded with benefits like purchase protection, extended warranty coverage, and price protection.
For example, your credit card reimburses you the cost of broken or lost items within the first 60 days. Some credit cards also provide one year of coverage on the standard warranty on electronics, kitchen appliances, and tools.
Finally, some credit cards offer price protection which allows you to obtain a refund for the difference in price if you buy something and then see it advertised for less within 60 days.
Picking a Card Meant for Large Purchases
Choosing a credit card can be tricky. You want to find a card with an interest rate you can handle if you end up carrying a balance, enough rewards to make the card worth it, and some pretty sweet sign-up bonuses. So, which factors guide you when picking the most efficient card for your large purchases?
Each credit card comes with a different interest rate depending on your credit history. You incur some rates if you don't pay your total balance by the due date every month. And others are promotional tools to entice new customers to sign up for credit cards with 0% interest periods or other incentives.
Either way, you should be mindful of the interest rates before picking up your card. Remember: the lower the interest rate on your card, the less money you'll have to pay if you carry a balance from month to month.
Credit cards offer a grace period between 21 and 25 days—paying the balance in full before the grace period means that you will not pay interest on your purchase.
For example, you have a $500 car repair bill. But your credit card payment is due at the beginning of next month. If your credit card has a 25-day grace period, no interest will accrue, provided you pay off your purchase within those 25 days.
Some credit cards have an annual fee, which means you'll have to pay to use the card every year. Before committing, make sure that the yearly fee is worth the benefits that come with the card.
Reward Points and Sign-up Bonuses
Credit cards are an appropriate way to finance large purchases over time. Always consider whether your credit card offers rewards or incentives, whether it allows you to redeem points and use them to enjoy your travel, discounts on assets, and cashback.
If that sounds good, start shopping around now!
Sign-up bonuses are almost always worth it. They can earn you cash back or rewards points, which you can use to save money on your next trip or pay down your balance over time.
With long-term warranties and return protection, you can make expensive purchases without fearing losing much money if anything breaks or malfunctions. And, you can buy larger products without fear of being stuck with an expensive item that doesn't work.
Lastly, if you find an item priced lower somewhere else within 60 days, your credit card may even refund the price difference!
One of the critical factors to consider while choosing a credit card is customer service. Choose a company that responds promptly and efficiently when things go wrong. This is especially essential when using your credit card for travel and you need to cancel a reservation or change a flight.
Best Ways to Use Your Credit Card For Major Purchases
There are several ways to use a credit card to make large purchases without hurting your credit score. Follow these tips, and you'll be on the road to establishing great credit!
Have a Plan
Creating a budget and following it is an excellent way to avoid overspending and getting hit with interest charges. With a budget, you'll be able to pay off all your bills on time and prevent overspending.
Monitor Your Purchases
Always keep track of purchases when using a credit card. Monitoring helps you maximize rewards, and some apps have this feature built-in, making it super simple. Monitoring purchases also help prove errors on your credit card statement to the bank for correction.
An automatic credit card payment ensures that your purchases are paid off on time every month. It takes the guesswork out of paying your bills and establishes a responsible pattern of credit use. This pattern helps you to qualify for lower interest rates in the future. Automatic payments are a great way to avoid late fees and penalties.
Spare Your Credit Limit
Make your large purchases on your credit cards with the highest credit limit and pay off the balance as soon as you can. Using the lowest amount of your available credit will keep your utilization ratio low, which is good for your credit score.
Additionally, having a large amount of available credit will give you a safety net. Let's say that you needed to make an emergency purchase such as a refrigerator. It would be impossible to make this purchase with your card if you had already used most of your available credit
Choosing the most appropriate credit card will save you money and reduce stress as you make a big purchase. Whether you want to save on interest or snag a huge sign-up bonus getting a new credit card can be a savvy money strategy
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