9 Things to Consider When Choosing a Credit Card for Large Purchases

Jun 20, 2019

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One of the first lessons I learned when I got into the points and miles hobby is to put everything possible on a travel rewards credit card. However, it’s also important to choose the best card to make sure that you get the biggest bang for your buck. This is especially true when it comes to making a large purchase. So, today I want to discuss nine things to consider next time you plan on swiping your credit card for a significant amount of money.

For starters, let’s agree that the definition of a “large” purchase can vary significantly from person to person. You may not be able to charge a new car purchase to a credit card, but spending $1,000 or more on a medical bill, new laptop computer or an essential household item may be much more common. So, what card should you use?

In This Post

Use a Charge Card

One option is to use a charge card instead of a credit card for large purchases. The biggest benefit to using a charge card is that charge cards have no preset spending limit. Instead, each purchase is approved on a case-by-case basis based on your history. The downside to using a charge card is that you must pay off your balance in full each month. (Then again, you should always be doing this, as I wrote about in my 10 commandments for travel-rewards credit cards post.)

(Photo by Kwangmoozaa/Getty Images)
You don’t have to worry about a preset spending limit on charge cards. (Photo by Kwangmoozaa/Getty Images)

As a reminder, one of the largest factors affecting your credit score is your utilization rate; in other words, how much of your available credit you’re using. Since charge cards don’t have preset limits, they aren’t included in this calculation. As a result, charging a $5,000 purchase to a charge card won’t have nearly the same impact on your credit score as charging that same purchase to a card with an $8,000 credit limit. However, your statement balance is still reported to the credit bureaus, so creditors looking at your credit report will still see the high balance.

American Express is the main issuer of charge cards, and one of the most popular ones is The Platinum Card® from American Express, which currently offers a welcome bonus of 60,000 Membership Rewards points after you use your new card to make $5,000 in purchases in your first three months. It also includes a wealth of benefits such as an up to $200 annual airline fee credit, access to Centurion Lounges, monthly Uber credits and elite gold status with Marriott and Hilton. The card does have a $550 annual fee though (see rates & fees).

(Photo by Marcus Manoogian / The Points Guy)

Another great option is the American Express® Gold Card, which offers a welcome bonus of 35,000 Membership Rewards points after you spend $4,000 on purchases on your new card in your first three months. This card, which offers 4x points at restaurants worldwide, 4x points at US supermarkets (on up to $25,000 per year, then 1x) and 3x points on airfare booked directly with airlines or on amextravel.com, is the perfect in-between card. Plus, the card’s perks include $10 monthly dining credits at select restaurants and up to $100 annual airline fee credit. The card has a $250 annual fee (see rates & fees).

(Photo by Isabelle Raphael)

Before you apply for either of these cards, be sure to check the CardMatch tool to see if you’re targeted for a higher bonus than is publicly available.

Use a Card with Bonus Earning

Where you make your purchase matters, as cards have bonus categories that include particular types of merchants. For example, if you’re purchasing a new desk or office chair, you’ll earn more points with the Ink Business Cash Credit Card when you make your purchase at an office supply store instead of a furniture store. Check out TPG‘s Ultimate Guide to the Best Cards for Each Bonus Category and determine if your purchase could earn bonus points if purchased from a certain merchant type.

(Photo by Isabelle Raphael)

Events, including weddings, are a somewhat special category. If you’re able to host your event at a hotel, you may be able to earn bonus hotel points by putting the cost of the event on a co-branded hotel credit card like the Hilton Honors Aspire Card from American Express or the World of Hyatt Credit Card. Or, if your event is held at a restaurant, you may be able to earn bonus points using a card like the Citi Prestige Card or the American Express Gold Card that offers bonus earning at restaurants.

Photo courtesy of Hyatt Ziva Puerto Vallarta.
Destination weddings, or even a wedding at a local hotel, may earn you bonus points when charged to a card with hotel or travel bonus categories. (Photo courtesy of Hyatt Ziva Puerto Vallarta.)

Some purchases, such as medical bills, likely won’t fit into any bonus categories. For these types of expenses, you may want to use a card that’s good for everyday spending. One card to consider in this category is the Chase Freedom Unlimited.

The Chase Freedom Unlimited provides 1.5% cash back on all purchases. Plus, it offers 0% APR on purchases for the first 15 months your account is open. Although this can give you additional time to pay off your purchase, you’ll want to pay off your balance completely before the 0% APR period is over since the APR will jump to a variable 16.74% to 25.49% based on your creditworthiness once the first 15 months are over.

(Photo by Isabelle Raphael)

For purchases of more than $5,000, an appealing option is The Business Platinum® Card from American Express, one of our best business credit cards. Although the Business Platinum earns just 1 Membership Rewards point per dollar spent on most spending, you’ll earn 50% more points on purchases of $5,000 or more (up to one million extra points per year). Based on TPG’s latest valuation of Membership Rewards points at 2 cents each, this means you’ll earn a 3% return on these large purchases.

Check Amex Offers and Chase Offers

One often overlooked aspect of maximizing earning is Amex Offers and Chase Offers (which you can now see online). These offers provide statement credits or extra points when you add an offer to your card and then make a qualifying purchase. You can view the currently available offers when you log in to your online account page.

Two of the 100 Amex offers current available on my Amex Platinum Card.
Two of the 100 Amex offers current available on my Amex Platinum Card.

You’ll usually find more Amex Offers per card than Chase Offers, but it’s worth checking the offers on all your Amex and Chase cards before making a large purchase. Offers are usually available from travel, shopping, dining and entertainment merchants.

Use a Card with a Spending Threshold Bonus

Select credit cards offer valuable spending threshold bonuses that reward you for spending large amounts on your card during the year. Some examples include:

Charging a large purchase to a credit card that offers a threshold bonus could get you most or all of the way to the spending requirement for the bonus.

You can spend your way to a Southwest Companion Pass. (Photo by Isabelle Raphael)

Use a Card with Price Protection

Another possible option is to use a card that offers price protection. Price protection is a benefit that has been eliminated by most card issuers, but you can still take advantage of the benefit on select cards like the IHG Rewards Club Premier Credit Card.

The information for the IHG® Rewards Club Premier Credit Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Close up man using smart phone and holding credit card with shopping online. Online payment concept.(Photo by Wutthichai Luemuang / EyeEm / Getty Images)
Chose a card with price protection if you expect the purchase price may drop shortly after you make your purchase. (Photo by Wutthichai Luemuang/EyeEm/Getty Images)

Use a Card with Purchase Protection

Something else to consider for large purchases is whether or not your credit card has purchase protection. Most travel rewards cards include some type of purchase protection coverage, which will typically cover damage, theft and sometimes loss of a covered item shortly after purchase (usually within 90 to 120 days).

However, you’ll also want to know how high of a limit your card has, and whether loss is covered. For example, the Amex Platinum and the Amex Gold offer up to $10,000 of coverage per covered incident that includes accidental loss, while lower annual fee cards like the Hilton Ascend Card and the Blue Cash Everyday® Card from American Express don’t cover accidental loss and only provide coverage of up to $1,000 per covered incident.

(Photo by Eden Batki / The Points Guy)
The Amex Gold will cover your purchase even if you accidentally lose it within the first 120 days (90 days for New York residents) from the date of purchase. (Photo by Eden Batki / The Points Guy)

American Express makes it easy to determine the level of protection available on your card though. Just go to the American Express website, click on the type of protection you’re interested in and then click on your card. Note that most of these policies limit the coverage provided for natural disasters, and you can’t invoke the benefit on purchases of permanent household fixtures (like carpet or tile).

Use a Card with Extended Warranty Protection

A similar benefit to purchase protection is extended warranty protection. When you purchase an item with a stated manufacturer’s warranty, some credit cards will match or extend that warranty. This can be especially useful on appliances or electronics, which always seem to go bad a month or two after the initial warranty period is up (or is that just my bad luck?).

You’ll want to make sure to save the original receipt, as you’ll need it to submit a claim to invoke the extended warranty benefit. But, if you’re making a large purchase, this can offer peace of mind and may one day put some money back into your pocket.

Woman chooses the laptop in electronics store, shoot with Nikon lens105 mm f/1.4(Photo by Filipovic018/Getty Images)
Electronics often stop working shortly outside their manufacturer’s warranty, so it’s best to use a card that will provide extended warranty protection. (Photo by Filipovic018/Getty Images)

All American Express personal cards that feature extended warranty protection — which is seemingly most Amex cards — match warranties of less than two years and extend warranties of two to five years by two years. For American Express personal cards, coverage is usually up to the lesser of $10,000 or the amount charged to the card.

Many Chase credit cards, including the Chase Sapphire Reserve, Chase Sapphire Preferred Card and Chase Freedom Unlimited, provide a year of extended warranty coverage on products with manufacturer’s warranties of three years or less. Although this is a more limited duration than what is provided on Amex personal cards, Chase’s extended warranty protection doesn’t exclude any particular types of damage.

Use a Card That Earns Transferable Points

I firmly believe that every traveler out there should earn transferable points on their credit cards. By not locking yourself into a specific currency, you hedge against a sudden and significant devaluation. These points tend to appear at (or near) the top of TPG’s monthly valuations:

Each of these programs has its pluses and minuses, so the best advice I can give is to look at the various transfer partners and identify which you’re likely to utilize most frequently.

Use a 0% APR Card

Although TPG always recommends paying off your balance in full each month, there are some situations where you might need some extra time. In this case, you’ll want to consider a card that offers 0% APR on purchases. You may be able to activate a 0% APR offer on an existing card in your wallet, or you may want to sign-up for a new card like the Chase Freedom Unlimited that initially offers 0% APR on purchases for the first 15 months (then a variable APR of 16.74-25.49% applies). However, be sure to pay off your balance in full by the end of the 0% APR period so you don’t incur high interest and fees.

(Photo by Isabelle Raphael/The Points Guy)
(Photo by Isabelle Raphael)

Bottom Line

If you have a large purchase coming up, you should definitely think about which credit card makes the most sense. Some of the considerations above relate to earning and redemption potential, while others act as insurance policies if things go awry. As always, feel free to remove considerations that aren’t important to you or relevant to your purchase, and add additional weight to the ones that mean the most to you.

The right card for each purchase will depend on the item being purchased and your particular circumstances. For some purchases — especially electronics — the potential value obtained from extended warranty, purchase protection and price protection benefits may justify using a card that earns less points on the purchase. Or, it might make sense to use a particular card if you’re working toward a spending threshold or a minimum spending requirement on that card.

Featured photo by Marvin Meyer/Unsplash.

Additional reporting by Katie Genter.

For rates and fees of the  Amex Platinum, click here.
For rates and fees of the Amex Gold, click here.

The Platinum Card® from American Express

WELCOME OFFER: 60,000 Points Terms Apply.

TPG'S BONUS VALUATION*: $1,200

CARD HIGHLIGHTS: Delta Sky Club and Centurion lounge access, $200 annual airline fee credit and up to $200 in Uber credits annually

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

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More Things to Know
  • Earn 60,000 Membership Rewards® points after you use your new Card to make $5,000 in purchases in your first 3 months.
  • Enjoy Uber VIP status and free rides in the U.S. up to $15 each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings.
  • 5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel.
  • 5X Membership Rewards points on prepaid hotels booked on amextravel.com.
  • Enjoy access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world.
  • Receive complimentary benefits with an average total value of $550 with Fine Hotels & Resorts. Learn More.
  • $200 Airline Fee Credit, up to $200 per calendar year in baggage fees and more at one qualifying airline.
  • Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your Platinum Card®. Enrollment required.
  • $550 annual fee.
  • Terms Apply.
  • See Rates & Fees
Intro APR on Purchases
N/A
Regular APR
N/A
Annual Fee
$550
Balance Transfer Fee
See Terms
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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