A Personal Finance Guide

Yes, it Can Definitely Be a Good Idea to Charge a Car on Your Credit Card

Today’s market and financial situations have brought up a lot of interesting scenarios for consumers. People find themselves looking for bargains and deals now more than every out of sheer necessity. The value of the dollar, and getting the most out of every dollar, is on everyone’s mind. So, when you decide to buy your next car, is it a good idea to charge it on your plastic? There are more than a few factors that go into coming up with the right answer, but more often than not, the answer is ‘yes’.

The first thing you need to look at is what card you would use to make such a large purchase. Most people have anywhere from 3 to 5 cards with varying amounts owed on each and with various credit limits. Before doing anything at all, you need to find the charge card that has these three things: the least amount of money owed on the card, the highest credit limit, and most importantly, the lowest APR. It’s a good idea to have a credit card that has a limit above $15,000 with very little money owed on it. This allows you to charge a large amount towards purchasing a car.

The next thing to do is to check what APR you could get from a credit union or from the car dealership itself. Chances are that you probably have a card that has a lower APR than the one being offered by the car dealership or credit union. And if that’s the case, then charging your car to your charge card is a great idea. As long as your credit card APR is lower than their best offer, you’re far better off charging it.

Another thing you need to plan on is using that charge card only for the car payments. Don’t charge the chosen credit card and then expect to be able to continue charging other purchases on it regularly, such as groceries, bills, etc. That card should be set aside only for the car payments until the total amount due has been substantially lowered.

Okay, so what if the APR offered by the credit union or car dealership is the same as your credit card? Does that mean you shouldn’t charge it to your credit card? Absolutely not. If the APR offered is the same, you still have a list of benefits to charging the purchase of the car to your card. For instance, almost every credit card has some type of “points” system, where every dollar you spend on the card earns you points towards some kind of major purchase. Some of the more common reward programs include free round trip airfare, free hotel stays, or major discounts on larger purchases.

This means that if the APR is the same, you would still benefit from charging the car to your charge card because you would gain such a substantial amount of points towards your reward program that you might walk away with a free round trip plane ticket that would have cost you four or five hundred dollars anyway.

You’re also more likely to have more control over your credit card payments than a regular payment to the car dealership or credit union. Call up your credit card company and find out what the minimum payment would be on a $15,000 or $20,000 bill. Figure on paying that amount to start with the knowledge that that number will lower as time goes on. With all these reasons, go ahead, charge your car to your credit card – it’s a deal!

Todd Holliday is an avid business enthusiast who enjoys writing about subjects such as Credit Card and Credit Cards.