Urgent costs happen, leaving you less time to choose the optimal credit card to use. But many large purchases can be planned in advance, giving you the chance to review the cards you’ve brought with you or even apply for a new one before you go shopping.
If you’re going to spend all your paycheck money on jewelry, airline tickets, home appliances or another expensive item, carefully choosing which credit card you use can save you. So, before you go to the store or click “add to cart”, work out your payment strategy. Here are some potential reasons to choose one card over another.
Cards with great sign up rewards
Many attractive credit card offers Welcome proposal is worth hundreds of dollars in cash refunds and travel rewards, but you need to spend a lot to earn them – typically $ 500 to $ 5,000 in about three months. A big buy can get you most of the way there without limiting your budget, as it’s a commodity you are already planning to buy. This approach is especially helpful if you haven’t spent enough within three months to earn a bonus.
Be careful not to justify buying more than you can afford just to earn bonuses. if you get into debtInterest charges may erase the value of the reward. For example, if you carry a $ 3,000 balance on a 20% annual percentage card and you make a $ 150 monthly payment on the debt, you’ll spend $ 680 on interest at the moment. you pay off your balance. That could easily outstrip the usual signup bonus on multiple cards.
Nerd Tips: Hopefully the new sofa will give you enough miles on one Travel bonus card To have a discount vacation? NerdWallet recommends that you apply for the pass a few months before you intend to book the prize-winning travel. That’s because it can take a few months to earn a signup bonus, plus another billing cycle for points to appear in your account.
Cards that earn the most points for your purchases
If you want to use credit You already have, find out which will earn the highest reward rate for the type of purchase you are making.
- Store credit cards May be a good choice if you’re planning to buy from a particular retailer and you’ve brought that retailer’s co-branded credit card. Some store cards offer benefits like a higher percentage of in-store purchases or longer lead-time.
- A reward card according to each level Earning a higher rate on certain purchases that might fit. For example, some of these cards earn extra points for travel purchases. Others offer rotating bonus categories at merchants where you can spend some serious money, such as home repair shops or wholesale clubs.
- Fixed rate refund card make money Cashback of 1.5% or more for each purchase is an easy way to save without a lot of effort.
The card has the most protection
Purchase transaction protection is very important, especially when you’ve spent a lot of money. Some cards offer benefits that can get you money back under certain circumstances when you buy an expensive item or your travel plan is sideways. You must use a card with safeguards to make a purchase. Just carrying the card won’t do you any good.
- Purchase protections and extended warranties Can help if your item is damaged. Exclusions may apply, so review your card policy before making a purchase.
- Price protection may be helpful if you discover the advertised item for a price lower than the price you paid. Today, this privilege is increasingly difficult to find, but a handful of cards still offer it.
- Travel protection This may include insurance for lost, stolen or damaged baggage. You can also get a refund in the event of a significant delay in your trip, or if you have to cancel or shorten your trip for an insured reason, such as an illness. Again, exclusions may apply.
Card with 0% interest rate
A card that charges 0% APR on new purchases can give you a long time – even a year or more – to pay off a large balance. This option can save you a lot if smaller monthly payments perform better for your budget.
For example, if you charge a fee of $ 2,500 for a 15-month interest-free card, you could pay about $ 167 per month and pay off the debt in installments before the promotion period ends and the card’s continuous APR will be effect. Compared to the 18% APR charge card without the 0% APR promotion, you’re saving $ 353 in interest. You will owe interest on any remaining balances after the interest-free promotion ends.
Some store credit cards also offer deferred interest rate transactions. But unlike the real 0% referral APR offer, if you have any remaining balance at the end of the deferred payment promotion, you will actually owe interest on the total initial purchase amount, effective force from the transaction date.
Another tactic to consider: Combine multiple cards
Breaking down a large purchase across multiple tokens can be one way to maximize benefits. You can charge a half on a new card and make good progress in earning a signup bonus, then half to a card that earns a high percentage of the reward at that merchant. Or you can charge a partial fee to the card with the 0% APR promotion to fund a basic portion of the purchase.
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Sara Rathner writes for NerdWallet. Email: [email protected] Twitter: @sarakrathner.