Emergency expenses happen, leaving you little time to pick the optimal credit card to use. But many major purchases can be planned well in advance, giving you a chance to consider the cards you already carry, or even apply for a new one before you go shopping.
If you’re about to drop a paycheck’s worth of money on jewelry, a plane ticket, a home appliance or another expensive item, carefully choosing the credit card you use can help you save. So before you head to the store or click “add to cart,” plot out your payment strategy. Here are some potential reasons to pick one card over another.
The card with a big sign-up bonus
Many credit cards offer enticing welcome offers worth hundreds of dollars in cash back and travel rewards, but you need to spend a lot to earn them — typically $500 to $5,000 in around three months. A big purchase can get you at least most of the way there without busting your budget, since it was an item you were already planning to buy. This approach is especially helpful if you wouldn’t otherwise spend enough within three months to earn a bonus.
Take care not to justify buying an item that’s more than you can afford just to earn a bonus. If you get into debt, the cost of the interest you’d pay can wipe out the bonus’s value. For example, if you carry a $3,000 balance on a card charging a 20% annual percentage rate and you make $150 monthly payments toward the debt, you’ll spend $680 on interest by the time you pay off the balance. That could easily outstrip the typical sign-up bonus on many cards.