Should You Buy A Car With A Credit Card?

Automotive

Should You Buy A Car With A Credit Card?

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Credit cards allow you to buy practically all the small items that you desire, but when it comes to big items like cars, conventional knowledge tells you that that is a stupid move to make in terms of long-term debt. Credit card interest can be pretty nasty and way higher than the interest of your ordinary car loan. This may be true, but if you happen to have the cash to back up your credit card purchase, this is definitely a viable option that can actually get you some savings.

Let's say what you have is a rewards card that allows you to get a rebate of 2% on your purchases. Once you purchase a car that is worth $20,000 with your credit card, that's already equivalent to $400 in savings. Got a miles card instead? Then get yourself miles almost equivalent to that amount by purchasing $20,000 to your card. Credit cards have so many offers to entice people to buy using plastic, and if you have the money to back up the loan, why not take advantage of these rewards?

Companies also tend to offer 0% promotions for big-ticket items when you buy using plastic. These promotions are often offered for 6 and 12 months, with the payment given either by installment or by cold cash. When you put your car payment through your credit card and put your money on investments that give you modest but guaranteed returns, then at least you will be able to get a few hundred dollars after your loan payment is complete.

Just a word of caution, however. you SHOULD have money that can back up your credit card purchase. You should the card just to reap the benefits that go along with it, but you should not use your card to make a car loan. Otherwise, you will see yourself eaten by interest in the long run.

Some would say that it is much better to just get a car loan and use the money that you have to invest in vehicles with much-larger interests. This also sounds good, but do take note that there is the risk that you might lose all your money in the end. Your money, your choice.

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Tags: • vehicles • investments • installment • interest • debt • credit cards • car loan • car • credit card •

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