When Does It Make Sense to Finance Big Purchases Using a Credit Card?

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  • Credit cards generally are not a very affordable way to borrow.
  • If you're making a big purchase, there may be other cheaper kinds of debt.
  • However, a credit card could be the right way to finance a large purchase if you have a 0% APR offer.

It may actually be a smart move to charge something big on your cards in this one situation.

Credit cards are notorious for having high interest rates. As a result, it's generally a good idea to avoid carrying a balance. You typically won't want to charge anything on your cards that you can't pay off when the statement comes, otherwise your purchases will become much costlier due to the interest you'll have to pay.  

If you do have to finance something that you can't pay for all at once, other types of debt such as personal loans could be a cheaper alternative. Since personal loans have lower interest rates, they should be considered over a credit card in most circumstances.

There is one exception to this general rule, though. With the right type of credit card, financing a large purchase using your card could be a smart move. 

This type of credit card could be ideal for paying for purchases over time

The best -- and likely only -- situation where it makes sense to finance big purchases with a credit card is when you can qualify for a card offering an introductory 0% APR rate on purchases. 

Cards offering 0% introductory rates are common, as card issuers use this type of enticing offer to encourage customers to sign up. And, depending on the specific card and the offer you get, you may have as long as 12 to 15 months to repay the balance due on the card without paying any interest at all on your purchases. 

This is one of the only types of borrowing where you can pay off your purchase over time and pay no interest at all. 

Is a 0% APR card the right choice for you?

Using a 0% APR credit card to finance a large purchase is the right choice in a few key circumstances. In order for this to make sense:

  • You need to qualify for this type of offer from a card issuer. This usually means you need at least good credit.
  • Your credit limit needs to be high enough that you can finance the purchase. Credit limits vary based on card issuer and your financial credentials. 
  • You should make sure you're able to pay off your entire purchase before the 0% rate expires. If you can't, then you could get hit with high credit card interest rates and this method of financing could end up costing more in the end than other options, such as a personal loan offering a lower interest rate

If you can easily qualify for a card that offers you many months to pay off your purchases without interest -- and you've done the math and can easily make large enough monthly payments to pay the debt in full --  then there's little downside to opting for a 0% APR card. 

Just be smart about not purchasing more than you can afford and consider setting up autopay to make absolutely certain your payments arrive on time and your balance is paid down to $0 before your promotional rate expires. If you do that, your financed purchase doesn't have to cost you any interest at all thanks to your savvy use of credit card perks. 

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