What to consider before making a big purchase?
At different times in our lives, we have different financial needs and at times we may have to make big purchases too. Mostly we make use of credit cards or loans to make these big purchases. While these purchases can bring you lots of credit card rewards, the installments can bring in financial pressure too. And if you cannot pay the installments then it can lead to a bad credit score.
These questions will serve as a useful reference while making a big purchase.
- Can you pay using credit cards? Most vendors prefer cash for big purchases and they give a discount for cash too. You can ask them if they accept credit cards as there is a fee associated with it. Asking beforehand can save a lot and it can also add some points to your credit card. Many times, you can choose to buy at a big retail store, just because they accept credit cards.
- Will the vendor charge extra for using a credit card? Even though the supplier would agree for the credit card, it might charge extra percentage or fees for accepting plastic. Most vendors have different pricing for credit cards and for cash. Make sure that you ask this difference while paying with credit card. Sometimes it might not be beneficial to pay extra just to earn reward points. If they are charging 2% higher for the product then it might not be worth the points for sure.
- Do you have enough credit balance? It is important to check if you have enough credit left in your card or not. Also, check whether you would be able to make payment else you may end up paying a lot of interest.
- It is not worth to pay a higher price just for the sake of earning the rewards. If the price is just 2 percent higher than the additional spending will probably be much more than what you will recoup in the miles or points.
- You also have to make sure that the credit limit is high enough to charge the big purchase on the card
You have to pay off the card on time and full every month. When you are making the big picture which is very hard to accomplish if there is no ample cash in the bank to pay off from your credit card. You have to consider the waiting until you have saved enough money for buying. Otherwise, the credit score will fall and you will hit by the expensive finance charges that will add hundreds of dollars or more to the purchase price. Most of the reward cards are not limiting the amount which you are charging and earning the rewards.
