Large purchases are a part of life.
Whether you’re buying a car, paying for a wedding, or furnishing a new house — there are things out there that cost a lot of money.
How you pay for that’s up to you.
You might want to save up, and pay for it in full when you have the money. You may use a payment plan with the company you make the purchase from. There are also personal loans.
Either way, the points is to spread the payment out over time.
Well today, we’re looking at credit cards that allow you to make large purchases and spread the payment out over a number of months.
Let’s take a look at what you need to think about before you use a credit card for a large purchase.
For the full picture, keep on reading. Otherwise, you can view the stats, or jump straight to each of the cards:
Selection Criteria: What’s Important in a Credit Card for Large Purchases?
First things first, you need to understand the purpose of each credit card.
Ignore Rewards Cards
Forget points if you’re making a single large purchase. It’s just not worth your time.
You see, to make the most of rewards credit cards, you really need to do the vast majority of your everyday spending through your rewards card. Spending most people put through their current account/ debit card.
Then, you pay off the amount in full each month, and spend up to the limit again (or whatever you usually spend) the next month. This way you can quickly build points.
In this scenario, we are making a single large purchase. For the sake of this example, let’s say it’s $5,000.
With a rewards card, you might spend $2,500 each month through your card and pay it off. So, over the course of a year, you get rewards points for $30,000 worth of spending.
In this case, we are spending $5,000 and paying it off over 12 months. So, we’re only getting rewards for $5,000 worth of spending. That’s not going to translate into significant rewards.
Focus on Low APR for Purchases
Instead of focusing on rewards points, we want to focus on low interest rates.
We want a card with a low annual percentage rate (APR.)
Let’s go back to the $5,000 scenario.
If our APR is 10%, after a year we will owe $5,500.
If our APR is 25%, after a year we will owe $6,250.
As you can see, by getting lower interest rates, you can save yourself significant amounts of cash.
Even better though, there are cards out there that do introductory offers of 0% APR for an extended period of time. This is generally anywhere from three months, all the way up to 18 months.
Going back to our $5k example, with an 0% introductory APR of 12 months, we can pay back less than $420 per month, and not pay any interest whatsoever.
So, in this case that is the best option.
In the cards below, you can find a selection of the best cards with introductory periods of 0% APR, and cards with low interest rates.
5 Best Credit Cards for Making Large Purchases
Required Credit Rating: Good
Headline: 0% Intro APR on Purchases for 18 months
Benefits:
- 0% APR on purchases for 18 months
- 0% APR on balance transfers for 18 months
- No annual fee
- Balance transfer fee the greater of $5 or 5%
- Security measures like purchase protection and account alerts
Intro APR:
0% for 18 months
Variable APR:
15.74% to 25.74%
Annual Fee:
$0
Other Benefit:
0% on balance transfers
What’s Good About It?
In my opinion, the best thing about this card by a long way is the intro APR offer.
You get the choice of 0% on purchases or balance transfers for a full 18 months.
Since we’re focusing on making large purchases in this article, let’s take a look at what that means in this context.
Basically, you get the card, spend $5,000 in month one. Then, you have 18 months to pay off the balance without being charged any interest.
This translates to less than $280 per month for 18 months.
This makes things very manageable. For example, if the interest free period was 6 months, you would have to pay off over $800 per month for 6 months, if you wanted to avoid paying any interest.
That could stretch your finances. As you can see, the 18 month period makes life a lot more manageable.
Another positive is the qualification criteria. I understand you can get this card with a ‘good’ credit rating.
I’ve heard reports of people getting this card with credit scores around 650, but I’d make sure you have at least 700 before applying to make sure you’re approved.
What’s Not So Great About It?
For what we’re looking for, this card is a pretty solid choice. There aren’t that many drawbacks.
Having said that, once our 18 months of 0% APR expires the APR reverts to anywhere between 15.74% and 25.74%.
As we already touched on, this rate can have a big impact upon the amount you have to repay. The upper end of this scale is very high. I would want to get stuck with a 25%+ APR on a credit card.
It’s not a major issue, just something to be aware of.
Basically, after the interest period runs out, my usage of this card would decline significantly. There aren’t all that many positives after the initial 18 month period.
Required Credit Rating: Fair – Good
Headline: 0% APR on Purchases for 15 months
Benefits:
- 0% APR on purchases for 15 months
- 0% APR on balance transfers for 15 months
- Balance transfer fee is greater of $5 or 5% of balance transferred
- No annual fee
- 1.5% cash back on every purchase
- $150 bonus when you spend $500 within the first three months
Intro APR:
0% for 15 months
Variable APR:
16.74% – 25.49%
Annual Fee:
$0
Other Benefit:
$150 sign-up bonus
What’s Good About It?
The Chase Freedom Unlimited also has an extended introductory period of 0% APR for purchases.
In this case, it’s 15 months.
This is ideal for large purchases. It gives you plenty of time to pay off your purchase in small, monthly chunks without eating too much into your monthly budget.
Generally, cards with large 0% APR introductory periods aren’t very attractive once the introductory period expires. However, this card offers cash back rewards — 1.5% cash back on every purchase.
While there are better designated rewards cards out there, it still means this card isn’t entirely useless once the introductory period expires.
There’s also an added bonus — the sign-up bonus.
With this card, you get $150 cash back if you spend $500 on purchases within the three months of opening your account.
If you’re planning on making a single large purchase with your card, you’re basically getting a $150 discount on your purchase with this card.
It’s worth considering.
What’s Not So Great?
There aren’t many disadvantages to this card.
Sure, the rewards could be better. But we’re not really focused on them in this scenario.
The biggest downside is probably the variable APR. For this card it is anywhere between 16.74% and 25.49%.
This can make it difficult to actually pay down debts when the time comes. Really, you want to be paying off your balance in full every month once the introductory APR offer expires.
Required Credit Rating: Excellent
Headline: 0% Intro APR for 15 months
Benefits:
- 0% APR on purchases for 15 months
- 0% APR on balance transfers for 15 months
- 1.5% cash back on all purchases
- 3% balance transfer fee
- $150 bonus when you spend $500 within 3 months
Intro APR:
0% for 15 months
Variable APR:
14.74% to 24.74%
Annual Fee:
$0
Other Benefit:
$150 cash bonus
What’s Good About It?
To be honest, the stats on the Capital One Quicksilver Card, and the Chase Freedom Unlimited card are almost identical.
Both cards offer 0% APR on purchases and balance transfer for 15 months. Both cards offer 1.5% cash back on all purchases, both cards have the same $150 sign-up bonus, and both cards have fairly similar variable APR rates.
There’s not a lot to separate them.
The Capital One Quicksilver Card has a slightly lower balance transfer fee, but we’re not really interested in that today.
In reality, this is a solid choice for a large purchase. You have 15 months to pay off your purchase in manageable chunks.
What’s Not So Great?
The variable APR isn’t great, but it is slightly better than the Chase Freedom Unlimited.
The real disadvantage this card has compared to the Chase Freedom Unlimited is the required credit rating.
You need an ‘Excellent’ credit rating to get this card.
You pretty much have your choice of cards when you have an excellent credit rating. In this case, you might want something with a lower standard APR.
Basically, someone with a ‘Fair’ credit rating can get the same benefits as you if they take the Chase Freedom Unlimited.
It’s not a major issue, but worth thinking about.
Required Credit Rating: Excellent
Headline: 0% Intro APR for 20 Billing Cycles
Benefits:
- 0% APR on purchases for 20 months
- 0% APR on balance transfers for 20 months
- Balance transfer fee is greater of 3% or $5
- No annual fee
- Cell phone protection when you pay your cell bill with this card
- Flexible payment dates and payment scheduling
Intro APR:
0% for 20 months
Variable APR:
11.74% to 23.74%
Annual Fee:
$0
Other Benefit:
Cell phone protection
What’s Good About It?
This card is pretty crazy:
You get 20 months interest free!
It’s very rare to see an introductory APR offer that lasts for this period of time. I wouldn’t expect to find another card (at least with a mainstream bank) have an introductory period this long.
You would blow my mind if you could find one for longer.
So, if all you’re doing is making a single large purchase, this card will give you loads of time to pay it off.
If we go back to our $5k example, your repayments will be $250 per month for 20 months. Interest free.
Beyond the large purchase, there’s a nice feature for cell phone protection. All you need to do is pay your cell phone bill through this card each month to be eligible for cell phone insurance. Terms and conditions do apply (like a $25 deductible,) but they’re pretty straightforward. It doesn’t seem like anyone is trying to catch you out here.
What’s Not So Great?
Every silver lining has a cloud.
But, to be honest, there’s not really anything majorly wrong with this card.
I actually like US Bank as a provider. They’re pretty responsive, and I’ve heard few complaints about their customer service.
Sure, you need an ‘Excellent’ credit rating, but the benefits justify this rating.
Required Credit Rating: Excellent
Headline: Interest Rates as Low as 8%
Benefits:
- Interest rates as low as 8%
- Credit line up to $25,000
- No annual fee
- Free car rental insurance
Intro APR:
N/A
Variable APR:
8%+
Annual Fee:
$0
Other Benefit:
No Balance Transfer Fees
What’s Good About It?
This one’s a bit out of left field, but I’ve chosen this card to feature because it has the lowest standard rate I can find amongst credit cards.
That’s because APR for this card goes as low as 8%.
Disclaimer time! The rate of 8% is based upon a credit score of 760. So you need a really top rate to qualify.
Let’s plug this 8% rate into our $5k example.
If you spend $5,000, you’ll repay $5,400 over 12 months. Other rates are hovering around the 18% range. That would be a repayment of $5,900.
That’s an immediate $500 saving.
What’s Not So Great?
Having said that, this example isn’t 100% genuine.
There is no introductory 0% APR offer.
That’s because all the other cards on this list have introductory periods of at least 12 months. So they actually offer a saving of $400 over the first 12 months. Some of the cards even give you longer to repay the payment before incurring interest charges.
On top of that, there’s not a lot of other benefit to this card. It’s all about the low rates.
So, if you want a long term card that allows you to roll your balance over on a monthly basis, this is a good idea. However, there are better options for large purchases.
Looking At The Stats
Credit Card
Intro APR
Variable APR
Annual Fee
Which One Should You Pick?
Personally, I like the U.S. Bank Visa Platinum Card.
It has the longest introductory period, and it has the lowest APR rate (outside LMCU Prime Platinum.)
I can see why you would choose the Chase Freedom Unlimited or Capital One Quicksilver Card for the $150 sign-up offer.
But…
For me the U.S. Bank Visa Platinum Card is the best option.