You probably regularly swipe your credit cards for things like fuel, groceries, and take out. And you can have recurring charges on your card every month, like your streaming service, cable bill, or cell phone. But did you know that you can also make larger purchases on your cards? Here are a few that might surprise you.
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1. A car
A lot of people can’t buy a vehicle directly – that’s what auto loans are for. But generally, with a car loan, you’ll put some money on your vehicle up front, the same way you put a down payment on a house, and finance the rest. And some resellers may allow you to charge this deposit to a credit card.
Now, before you get too excited one thing you need to know is that you will usually need to pay transaction fees. And that fee might be enough to wipe out the reward points you get in return. Find out what additional fees you will need to pay to use your credit card as a down payment for your car before proceeding.
2. Your rent
Most landlords require that you pay your rent by check. But some landlords or property management companies actually allow tenants to pay their rent with a credit card.
As with a car down payment, you will usually be charged a processing fee for going down this route. Remember, credit cards charge merchants a fee for processing transactions. It’s a pretty standard assumption that your landlord won’t want to pay these fees when collecting a rent check – so expect to pay them yourself if you charge your rent.
3. Tuition fees
Some colleges and private schools allow you to pay tuition (and fees) with a credit card. Now you can probably see where it’s going. Before doing so, check if there is any handling fee. In some cases there will be one, but in some cases there may not be. You can also charge room and board costs to a credit card if you pay directly to the university.
Know when to sweep and when not to sweep
Charging a down payment, rent, or tuition on a credit card might seem appealing, especially when you consider all of the cash back or reward points you might earn. But remember, not all car dealers, owners, and educational institutions allow you to use a credit card in the first place. And those who do may pass certain fees on to you that wipe out your benefits.
Calculate how much you will pay compared to the benefits you will get. For example, if you pay a 1.8% processing fee and earn 2% in credit card rewards, it might be worth it. However, if you only get 1.5% back, it will cost you more than what you earn.
Get all the facts before using a credit card for less conventional purposes. You might find it better to write a check. You can reserve your credit cards for expenses like groceries and entertainment, things that usually don’t incur additional charges.