How to Make Large Purchases Using a Credit Card

Posted March 29th, 2011 and last modified September 1st, 2014

Many people have to hold back when they want to make a large purchase because they do not own a credit card.

If you are considering buying furniture, appliances, or jewelry you have probably looked at the in-store financing options. While these are convenient it is possible that you can get a better deal by using a major credit card to make your purchase. Check out the latest purchase credit card offers.

Using Credit Cards For Large Purchases

Credit cards are often used to make purchases that cost less than a month’s wages. They are rarely used for more expensive items, though they may offer an advantage when these large items are purchased.

There are advantages to having a credit card and one of them is that you can make a large purchase with it and actually get rewarded. You will also be able to get the item right away,

If you are considering making a large purchase with your credit card, you may not really understand the implications that may be involved with doing that. What exactly is considered to be a large purchase? This would be any single purchase that consumes more than about 40% of your available credit limit, although some people claim it would be 20% or even 50%. Credit limits set up a cap on purchases, so this means that normally, buying something like furniture sets or vehicles on a credit card would not be likely at all.

It is true that those limits can be extended, and although this is simple to do (you usually only have to phone the creditor and request one) they do not always approve your request. To determine whether or not they will increase a card holders limit, they are going to review things such as repayment history, your most current income status and job status, and how long you have been a valued card member. Failure to make even one repayment on time will significantly decrease the chances of an approved limit increase, but those who show that they earn more income than they did when they first received the current limit who have made all of their payments on time will find that the chances of increasing limits become much better.

Everyone Uses Their Credit Cards Differently

Some people use them for absolutely all of their expenses whilst others use them for emergencies only. For the smart spender, it is important to have a plan when it comes to using your plastic. Far too often, consumers just swipe their cards without thinking about how they will pay off the balance and what they can actually afford to spend. This is the exact practice that has landed so many Australians in debt. If you are thinking of breaking out the plastic to pay for an expensive item or for regular expenses, you should think about the benefits and the potential risks of doing so.

Purchasing Using Your Credit Cards

When you have a low interest rate – Some plastic comes with introductory low interest rates. This is a scheme that the issuer uses to lure you into doing business with them. However, if the introductory rate is exceedingly low, you can use it to your advantage to buy something expensive that you really need like a new appliance or computer. Just make sure you pay it off before the rate expires and it jumps up to a higher standard fee. Sometimes the rate is ongoing, which would allow you to make large purchases on a regular basis and pay them off over time for less then other financing options.

An example of a low interest credit card which offers a low ongoing rate on purchases but regularly offers 0% on purchases for a limited time is the CBA Low Rate Credit Card.

Commonwealth Bank Low Rate Credit Card

Credit Card Offer with Low Purchase Rate

Limited time offer: Get discounted annual fee for eligible customers plus a low ongoing purchase rate and a balance transfer offer.

  • $78 p.a. ($48 for qualifying customers) annual fee
  • 13.49% p.a.* on purchases
  • 5.99% p.a. for 5 months on balance transfers
  • Cash Advance Rate of 21.24% p.a.
  • Up to 55 days interest free

If you have trouble managing debt – While it might sound counter-intuitive, using your plastic for only major expenses can help you avoid getting into the debt cycle. If you have trouble paying your bills off regularly,you would not want to use your card for everyday expenses, but only when it was absolutely necessary. You should spend with a plan and budget in mind for paying off the balance as quickly as possible in order to avoid excessive cost from interest fees.

The consumers who are best suited for using their cards for everyday expenses are the ones who are very good with their budget. These people can resist the urge to overspend on their plastic. They charge only what they can afford to pay off each month, avoiding all those costly interest fees. The best scheme for this type of spender is one that rewards them for their spending with valuable benefits and perks that they will actually use. If you fit into this spending profile, you should search for a scheme that fits your lifestyle and then use your plastic for all your expenses.

Your credit card should only be used in a way that makes you comfortable. You need to be able to have the convenience and security that plastic offers without worrying about getting into debt. Most of us know ourselves pretty well, if you know that you will not be able to consistently pay off your bill each month then switching to a cash system is probably better for you. Keep those cards for big expenditures only and work diligently to pay off the balance as quickly as possible.

Buying Big Items with Your Credit Card Instead of Using an In-Shop Loan

While buying big items with your credit card is not always the best choice. This is because these loans generally have very high interest rates that are higher than even credit card rates and are extremely inflexible.

Therefore, instead of using shop credit when you purchase big items, you might just be better off using your credit card. During the grace period, you can then look for a loan with better rates and conditions.

Purchase Big Items with Your Credit Card to Earn Points

If your credit card has a great rewards program, you should consider the purchase of big items with your card. No matter the type of rewards program, you can earn a lot of points on big items or get a percentage of the cash you spent back if you have a cashback credit card. Even if the cash back offer is only 1%, that is still 1% you saved. So, if you are spending $5,000, for example, you will get a refund of $50.

Then again, you can earn quite a large number of points, depending on the rewards program. Even with one that offers only one point per dollar you spend, that’s still 5,000 points that help you get that reward much faster.

Once the interest-free period is up, you can cover the amount you spent on your credit card with either your savings or another loan with a lower interest rate.

Keeping Tabs On Your Credit Report

If you keep a good eye on your credit report on a consistent basis (and you should be), if your report has changed significantly at some point in time, the lender may request that you apply for one of their cards that has a greater credit limit; this would then allow you to be able to make that large purchase that you have been needing or wanting. If you do apply for this type of credit card, you should try to find one that is going to offer incentives and rewards for your activity, such as one that offers cash back, 0% financing and the like. You may also want to consider a charge card, which has no pre-set credit limit. These are excellent if you know that you will be able to pay off your outstanding balance each month and avoid having any outstanding balance.

If you have more than one credit card and really need to make a large purchase, you can also consider spreading out the price of the item over all of your credit cards. You need to keep track of the interest rates of those cards though to make sure you don’t rack up an astronomical amount of interest. If you have a card or cards that have a 0% interest rate, put more of your purchase on that or those cards to save yourself potentially hundreds of dollars in the long run.

Consider all of the above options carefully to see which method will offer you the most purchasing power and the smallest amount of interest charges as possible to secure a good deal on your large purchase.

Credit Limit

A credit card has a spending limit on it. Often this credit limit is not high enough to make a purchase for an expensive item. Although some credit limits are rather high, this is becoming rarer. If you do not often use the credit card it is even more rare for it to have a high credit limit. This in many cases rules the credit card out as far as purchasing large items like a car or a set of furniture.

Credit limits can often be extended. This may only be for a short period of time. However, if you explain the situation of needing a higher credit limit so that you can purchase expensive items, you may have a good chance for the increase in your credit limit. If the first person you talk to cannot extend your limit, ask to speak to a manager who might have the power to increase the line of credit.

Failing that, another thing that can be done is to apply for a credit card with a higher credit limit. When you do this and are planning on using the card for purchase of large items, try to apply for a cash back card. Some of these offer as much as 5% during their introductory offer period. If you are planning on spending several thousands of dollars on expensive items, this can amount to a great deal of cash back.

If you can not get your credit limit increased, and you do not have the time to apply for a new card, consider spreading the cost of the item over several cards that you already possess. Credit cards have some advantages when making a large purchase. If you use a card that has a zero balance, you will have an interest free period. By the time the payment comes due, you may either pay it off, or switch it to an alternate payment method.

This can even be to a balance transfer card that you have taken out for this purpose. A balance transfer card will give you very low interest rates (sometimes even 0%) for a six, nine or twelve month period. This way you can pay for your large purchase and pay a minimal amount of interest.

Earn Rewards Points

If you are planning on making a large purchase anyway, having a credit card means that you can get that item you want right away, and earn rewards points on it if you have a collectible points card.

You can use your card this way even if you already have the money saved up to make a large purchase, such as a holiday, a new television or a car. You can pay for this item using your credit card and then simply pay back the full amount at the end of the month. You will have received rewards points for doing it this way that you can use for free merchandise or flights. If you have a credit card that offers cashback rewards points you will have made money on the deal.

Some credit cards also offer purchase cover when you use the card to buy your personal items. This means that you have additional coverage if there is any problem with the item within 90 days of purchase. This means a lot when it comes to a high-ticket purchase. How many times have you bought something only to find out that a manufacturer’s warranty was not good enough and had some type of fine print you were not aware of? This helps cover your item against loss or damage for almost any large purchases.

It simply makes sense to use your credit card when you want to make a large purchase. Many people are taking advantage of their credit card in this way, and you might as well be one of them too.

When Should You Make Such Purchases?

The recommended period for big purchases with your credit card is undoubtedly related to the perks. These are usually features included in the program created by the financial institution that issues your credit card and represent interest free periods. During perks, you will be able to make any transaction you like without having to pay more than you actually spend.

On the other hand, if your account is not in such a period, you will most definitely want to treat the entire situation seriously and spend carefully, because in most of the situations, the rate of interest you will have to pay back eventually is higher than you have probably expected and will lead you to debt.

Therefore, it is very important for you to understand the terms and conditions of your contract correctly before signing it, because otherwise, you have big chances to encounter some serious problems related to the use of your credit card, which could have been avoided if you had paid more attention. Make sure you know what an interest free period is and how to get the best out of it.

Protection For Shoppers

Another important aspect which you might want to take into consideration when it comes to making purchases with your credit card is related to the level of protection the banks provide customers with. For this purpose, most of the financial products made available come with a program that handles an extended warranty for each product purchased.

Even though most of the merchants sell their items with a warranty set over a limited period of time, with the use of your credit card, you will be able to extend this period even more, because of the partnerships established between financial institutions and the most important retailers from all over the country. In this way, you will eventually be able to benefit from extra discounts and an impressive number of special offers right away.

Switching To Another Credit Card

If you have already made a big purchase with the use of your credit card, you might want to consider switching to another similar services and probably another lender. This is because by doing this, you will have a big chance of being granted with a lower rate and eventually have the possibility to save some serious money in the long run.

For example, if you decide to perform a balance transfer you will be able to transfer funds between accounts at a rate that is rather insignificant and affordable for everyone. All in all, make sure you are really careful with the big purchases you make with your credit card.

As you can see there are several innovative ways that a credit card may be used to purchase your expensive items. You need only to be creative, and they will be invaluable if used in the right way. You may come out of making your large purchase and never have to pay any interest even if it takes twelve months to pay for it.


Buy Big Items to Save Money

It might sound a bit like an oxymoron, but it’s true. You can save money if you buy big items with your credit card, especially if you will be using your savings to make the purchase. If you use your credit card to pay for your purchase, you can take advantage of the card’s 55 interest free days on purchases. You might be able to delay paying off the amount you spent for a month, which gives your savings another month to earn interest. You then simply repay your credit card balance from your savings before the due date rolls around. This allows you to avoid paying interest on the amount you spent, but your savings get to accumulate more interest for that month.

Additionally, if you have your savings in a term deposit account, making early withdrawals usually incurs heavy penalties. So, why give money away when you can use your credit card to buy any big items until you can withdraw the money without the fee?

However, try to make the payment before the interest-free period is up or the interest costs might negate any benefits of leaving your savings where they are.

While using a credit card to buy big items is not a long-term solution, for the short-term, it can provide some nice benefits. Just don’t make the mistake of forgetting to pay off your bill in full before the interest-free period is up, no matter how tempted you might be to only make the minimum monthly payment.

Financing Large Purchases

When it comes to looking for a new credit card, it is important to shop around and look for deals. If you are looking to use your new card to help with financing large purchases, then it is even more important for you to find a competitive deal so that you can save some money in the long run.

Unfortunately, the deals for credit cards do not last forever, so you do have to act quickly. Let’s review some of the great offers that are available right now that can help you with financing large purchases.

The Westpac 55 Day Credit Card

The Westpac 55 Day Credit Card is an excellent credit card because it offers a 0% interest period of 5 months. If you intend to use your card for financing large purchases and think that you will be able to pay off your purchase during that time, then this is a great choice for you.

In addition to 0% interest, Westpac even waives the annual fee on the credit card for the first year. This is one of the best deals that is available on the market at the moment.

The Bankwest Breeze Credit Card

In the long run, Bankwest Breeze Credit Card is one of the most economical credit cards, as it offers very reasonable rates and fees – even after the introductory period is over. For the first year, the purchase rate for this credit card is only 5.99%, which is a great rate.

After the first year, it reverts back to its regular purchase interest rate of 10.75%, which is still a very competitive rate. In addition to this, the annual fee is $59.

This card has the lowest regular rate of only 12.49% p.a. and the annual fee is just $49. To put this into perspective, a lot of other credit cards have regular rates and fees that are twice as much as this card.

The Virgin No Annual Fee Credit Card

There are a few great features that this credit card offers. However, the interest rate is a little higher than the rest at 16.99%.

One of the best features of the Virgin No Annual Fee Credit Card is that it does not have an annual fee, which is a great way for you to save a lot of money. In addition to this, your large purchase can actually earn you reward points.

An important thing to remember when you are looking for a new credit card, is to shop around. Take your time to look at what deals are available so that you can find the best card for your needs. Be on the look out for the lowest interest rates and fees, so that you can save money with your new credit card.

Tips For Using Your Credit Card For Large Purchases

Use the card features - If you already have a credit card you should look into what types of features are available to help you make your purchase. Most cards have interest free days of up to 55 days.

This means you can buy an item and have all of that time to save up the money to pay off the card before you are charged any interest on the purchase. You should check with your card issuer to make sure that there are no restrictions to the interest free days. Another card feature that is valuable and often overlooked are extended warranties, insurance and special discounts.

Your card issuer may be partners with certain shoppes that offer cardholders deep discounts for shopping with them. If you need a big ticket item it would save you a lot of cash to shop with the partner outlets. Another big benefit is the extended warranty program offered with many credit cards. It gives you an extension on the manufacturers warranty, protecting your initial investment.

Retail stores will try to sell you an extended warranty, you can save on that expense simply by using your credit card. There are other kinds of insurance like purchase cover that protect your item from loss, theft, or damage which make it more appealing to use your card to buy big and expensive items.

Find low interest offers - If you know that you will have to make a large purchase in the future you can start looking now for low interest offers. Credit card companies do a lot of research on consumer behavior, they know that if they make a great introductory interest rate offer you will likely stick with them as your card company after the rate expires. Some cards even offer a zero percent introductory interest rate which means you can finance your purchases for free. If you are going to go this route make sure that you can pay off all or most of the purchase before the low rate expires so you maximise your savings.

Look into a balance transfer - If you have already made a purchase at your current credit card rate or did not have time to get a low rate card before you made your purchase you can still take advantage of low rates by doing a balance transfer. This is when you move the debt from one card to a new card for a lower interest rate. Some introductory offers are zero percent for a set amount of time. Again, make sure the offer is enough time for you to pay off the debt in full before the rate expires because once it does it likely will revert to a high interest rate.

Credit card companies want your business, so they are willing to make all kinds of offers in order to secure you as their loyal customer. These offers can be used to your advantage so that you never again spend excessive amounts of money on interest fees.

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Credit Cards Comparison

Rates last updated September 18th, 2014
Interest rate (p.a.) Balance transfer rate (p.a.) Annual fee Cash advance rate (p.a.)
ANZ Low Rate
ANZ Low Rate
A low rate on purchases, balance transfer and a low annual fee. 13.49% p.a. 0% p.a. for 16 months $58 p.a. 21.74% p.a. Go to siteMore info
Westpac 55 Day Platinum Card
Westpac 55 Day Platinum Card
Exclusive Offer to finder.com.au. 0% p.a. for 12 months on Purchases
$0 annual fee with platinum benefits including a platinum concierge service, overseas travel insurance, extended warranty cover and purchase security cover.
0% p.a. for 12 months (reverts to 19.84% p.a.) 3.99% p.a. for 6 months with 1% balance transfer fee $0 p.a. 21.29% p.a. Go to siteMore info
HSBC Platinum Credit Card
HSBC Platinum Credit Card
Earn rewards points plus a balance transfer offer. Access to prestige services including a personal concierge service and VISA Platinum reward program. 19.99% p.a. 0% p.a. for 8 months $0 p.a. 21.99% p.a. Go to siteMore info
Bankwest Breeze MasterCard - Exclusive Offer
Bankwest Breeze MasterCard - Exclusive Offer
Exclusive Offer to finder.com.au
Enjoy interest-free shopping for 13 months with 0% p.a. on purchases.
0% p.a. for 13 months (reverts to 12.24% p.a.) $59 p.a. 21.99% p.a. Go to siteMore info
Coles No Annual Fee MasterCard
Coles No Annual Fee MasterCard
Enjoy a low interest rate plus a $0 annual fee. 17.99% p.a. 0% p.a. for 6 months $0 p.a. 17.99% p.a. Go to siteMore info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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