Which Credit Card Should I Use to Maximize a Car Purchase?

Dec 4, 2016

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TPG reader Carla sent me a message on Facebook to ask about maximizing a large purchase:

“I’m getting ready to buy a new car. I read that most dealers cap the amount you can pay for with credit, but even if I can only charge $5,000 or so, which card will earn me the most valuable rewards? As far as I’m aware, I’d only get 1 point per dollar with my Chase Sapphire Reserve or Citi Prestige. Are there other, better options?”

One easy way to maximize spending is to use a credit card that earns bonus points for charges made in a given category. However, many purchases (such as new cars) fall outside of those categories, so you need to adjust your strategy. There are plenty of credit cards that earn valuable points for everyday (non-bonus) spending, but the calculus changes when you’re making a larger purchase. In that scenario, you can look beyond the points or miles you earn for each dollar spent, and instead find opportunities to bank lots of rewards all at once.

I think the best plan is to time large purchases with an application for a new credit card that offers a hefty sign-up bonus. For example, the Barclaycard Arrival Plus World Elite Mastercard comes with 40,000 bonus miles after you spend $3,000 or more in the first 90 days. That’s enough to redeem for a $400 travel statement credit, and once you factor in the points you earn on the actual purchase, you’re getting a return of more than 18% for meeting the spending requirement. In Carla’s case, the dealer might let her split payment between multiple cards, so she could potentially earn more than one sign-up bonus for her car purchase.

Another good option is to try and earn a spending bonus on a card you already have. For example, Delta Air Lines flyers could benefit from spending on a co-branded Delta Amex card either to earn bonus elite miles or to waive the MQD requirements for elite status. Alternately, you could use the Citi Hilton HHonors Reserve Card to help you qualify for the free weekend night certificate (after spending $10,000 in a cardmember year) or Hilton Diamond status (after spending $40,000 in a calendar year). Those bonuses are valued more subjectively, but they all make a nice addition to the points or miles you’d earn for using those cards in the first place.

You could use a large purchase to help you earn Delta Medallion status, among other rewards.

If you’re not in the market for a new card and none of your current cards offer a spending bonus, then just go with whichever one offers the most valuable rewards. I value Ultimate Rewards points over Citi ThankYou points, so in Carla’s case I’d prefer to use the Chase Sapphire Reserve over the Citi Prestige Card. You won’t get close to the same return as you would with a new application, but you should get more than if you paid in cash (assuming you’ve already negotiated the best price possible).

For more tips on maximizing large purchases, check out these posts:

If you have any other questions, please tweet me @thepointsguy, message me on Facebook or send me an email at info@thepointsguy.com.

Featured image courtesy of Kali9 via Getty Images.

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