Have a Costly Expense Coming Up? Consider This Credit Card Move

Using a credit card for a big purchase could be a win for your wallet.

Whether you plan to buy a new cell phone, laptop, or a pricey household essential, saving enough money before purchasing it is a good idea. However, if you're interested in earning credit card rewards, you may want to use a credit card to pay for your purchase when the time comes. You can then use your saved cash to pay the entire credit card bill when it arrives to avoid interest charges. Here's why this is worth considering.

Rewards credit cards are valuable

You're missing out if you're not yet using rewards credit cards. You can earn rewards using your credit card to pay for everyday purchases. But when doing this, make sure you only charge what you can afford to pay off, so you don't fall into expensive credit card debt. You'll have to pay costly credit card interest charges if you carry a credit card balance.

In addition to the ability to earn points, miles, or cash back, many credit cards promote attractive sign-up bonus offers to new cardholders. You could earn a hefty bonus if you meet the spending requirements. If you plan to make a significant purchase soon, you may want to consider getting a new credit card and using your card to pay for the purchase to earn the sign-up bonus. Check out our list of the best rewards credit cards to explore some card options.

What to consider before getting a new rewards credit card

You want to choose a card that will meet your needs and fit your lifestyle and budget. Here are some considerations that you should make as you compare credit card options:

• Check minimum spend requirements: Don't forget to review the minimum spend requirements. Can you spend enough money within the set timeline to earn the sign-up bonus offer? It may not be the right card for you if you can't afford to hit the minimum spend.
• Learn how the card earns rewards: It's also wise to review how your new card earns rewards. You want to choose a card that fits your spending habits well. For example, a dining rewards card may make the most sense if you dine out frequently. Choosing a card that rewards you for your most common purchases is best.
• Explore your redemption options: You should also consider your award redemption options. Does the card only offer cash back rewards, or can you redeem your credit card points for free flights or hotel stays? Knowing this before you get a new card can help you decide how to use your rewards once you earn them.
• Review credit card fees: Ensure you know all the credit card fees. If there is an annual fee, ensure that the benefits are worth the cost and that you can afford to pay the yearly fee.
• Understand your credit situation: You should also know your credit score or have a general idea of your current credit situation. Some rewards credit cards are more obtainable if you have a good or excellent credit score, so you want to make sure that you consider your approval odds before you apply for a new card.

Don't miss out on the chance to earn rewards

Before making your next big purchase, set aside enough cash in a high-yield savings account. But don't miss out on the chance to earn rewards. Paying for a costly expense with a credit card can allow you to maximize your rewards potential. Then, use your cash to pay your credit card bill off to avoid debt. Review our list of the best cash back credit cards to learn more.