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For most everyday purchases, credit cards are a no-brainer. The least glamorous spending — groceries, gas, public transit, coffee, snacks — is also the most advantageous for clear-eyed cardholders. Reliable, repeat expenditures are what point chasers rely on week in and week out to reach their spending minimums, amass rewards and solidify their credit scores.
It gets a bit trickier as the dollar values increase. Nearly all cardholders can stand to gain from making small, easily-reimbursed purchases on a credit card. A smaller amount stand to gain from the big buys, which raises the question: Is there a best credit card for a large purchase?
That said, “smaller amount” hardly means “none.” Some situations and consumer profiles lend themselves to making a large purchase on credit cards.
Some of it depends on who you are
Are you the type of spender who pays yours bills on time every time? Perhaps more importantly, are you the type of spender who won’t flinch when the balance comes in with a higher number than you’ve grown accustomed to?
Sticker shock is real — whether it’s a new car or a friendly reminder from your card issuer. If you know yourself well enough to know that 5- and 6-digit numbers raise your pulse to the point of decision paralysis, you might be better suited paying your retailer in installments, and/or routing your big purchases direct to your bank account.
Moreover, if you’re the type of cardholder who can’t resist the pull of the industry’s shiniest new toy, you may want to avoid the big purchases. Large credit card purchases can take some time to pay down, and in turn, will lock you into a card for as long as it takes. The last thing you want is to carry debt from card to card, accruing interest and leaving a trail of unpaid creditors. Not only will that harmfully affect your credit utilization rate (and ergo your credit score at large), but it could also injure your standing in the eyes of current and former issuers.
The rest depends on what card you have
Some issuers offer cards designed to help you pay off big purchases, most notably those with 0% APR introductory offers. Go through this five-question checklist to see if you (and your card) are well-positioned:
- _ Does your credit card have a low (or zero) interest rate? On the off chance you can’t repay your debt immediately, you’ll want to ensure you’re not taking an extra hit somewhere down the line.
- _ Is your credit limit on par with how much I’m looking to spend? You may need to request an increase. Exceeding your credit limit can leave you responsible for a costly penalty, so make sure you have a tight handle on your current balance before you commit.
- _ Are you using your credit card for more than just big purchases? Long periods of inactivity between purchases can both hurt your utilization rate and payment history. Plus, you could be leaving rewards on the table.
- _ Have you considered other ways a big purchase could affect your credit score? For example, don’t open a brand-new card just to max it out. It could affect your amount of new credit and, in tandem, your credit mix.
- _ Will your issuer reward your commensurately? This one isn’t a necessity, but it goes without saying that the more you can squeeze out of a purchasing decision, the better.
If you can check those boxes and you trust your own financial habits, then by all means, charge it.
Finding the best credit card for a large purchase
The advantages of making a big purchase on credit are easy to see when you’ve got the right card. If you’re on solid financial ground and already on the hunt for a new card, keep a few pointers in the back of your head:
Start your search with zero interest cards
The greatest fallout from a large credit card purchase could be paying it back over time. Guard yourself against escalating rates with a 0% interest credit card. The Capital One® Quicksilver® Cash Rewards Credit Card is a great place to start your search. Customers get 1.5% cash back on every single purchase, and the Capital One rewards program is as solid as any, offering a variety of travel rewards and gift card discounts. Plus, a $150 sign-up bonus (after making $500 in purchases within the first 3 months) never hurts.
There are plenty of flavors to choose
Where cards like the Quicksilver fall short is in their variety. Earning 1.5% cash back on everything is a solid, low-drama reward system that won’t give you much to think over. Of course, some cardholders want something to think over. If you’re looking to ramp up your travel or supercharge your earnings for unique experiences, consider the Capital One® VentureOne® Rewards Credit Card, which lets cardholders earn 1.25x miles on every purchase and 10x miles on eligible hotel purchases through January 2020.
See how long the good times last
Some cards may bill themselves as no-interest credit cards, but the label may hold true only for the first year or two. The VentureOne, for example, only extends a 0% APR for the first 12 months of ownership. After that, you’ll pay a variable APR between 14.24% and 24.24% based on creditworthiness. The same goes for the Discover it® Cash Back, a handy card for almost any wallet, offering 5% cash back on purchases in rotating bonus categories (up to the quarterly maximum, each time you activate, then 1%) and valuable travel protections. That said, the no-interest period is only in effect for your first 14 months of ownership, after which you’ll be adjusted to 13.49% – 24.49% variable APR.
As always, the best credit card for a large purchase is the one that syncs to the size of your purchase, spending habits and demands of a loyalty program. Keep these in mind (as well as your credit limit), and you’ll avoid the common missteps of putting a large purchase on credit cards.
Don’t fall prey to interest rate payments. Check out Bankrate’s complete catalog on credit card APR advice and learn how to finance your next purchase with a zero-percent introductory rate.