How to make large purchases with a credit card

A credit card can be a convenient option for furnishing your home, taking the family on holiday or buying new wheels – especially if you don’t have cash or savings to put towards your purchase. A 0% purchase credit card can help you save on interest charges with no interest for a year or more. Or a rewards credit card with a bonus points offer could be an easy way to rack up a bunch of points all in one go.

That said, if left unchecked, you could end up paying more than it's worth in interest charges and fees. Other options such as in-store financing and personal lines-of-credit may be also be available depending on the purchase you're trying to make and where. Here, we look at the pros and cons of using a credit card for making large purchases so that you can decide if plastic is the right way to go.

Why would I make large purchases using a credit card?

The potential upsides of using a credit card for life’s large items include:

• 0% purchase rates. These credit cards let you enjoy 0% interest on your purchases for an introductory period, usually between 6 and 24 months. This can translate into sizeable interest savings depending on the cost of your purchases.
• Rewards. Rewards credit cards let you earn points per $1 spent that can be redeemed for a variety of rewards including flights, hotels, car rentals, shopping vouchers, fashion, household, lifestyle goods and services, and more.
• Interest-free days. Similar in principle to 0% purchase credit cards, the standard interest-free days on your credit card (typically 55 days) gives you time to pay for your purchases without incurring interest charges.
• Flexible repayments. Compared to in-store financing, which usually involves fixed payments of the same amount each month, a credit card lets you make flexible repayments as often as you wish. As long as you pay at least the minimum amount that's listed on each statement, you can vary how much money you put towards the balance without penalty. You can even make additional payments to repay your debt more quickly.
• Complimentary purchase insurance. This will vary, but many credit cards these days come with complimentary insurance perks that mean your large purchases would enjoy free purchase protection insurance, extended warranty coverage and best price guarantees.
• Making use of an existing credit account. Paying with an existing card saves you the hassle of credit checks and possible waiting times that could come from applying for new credit through in-store financing.
• Extended interest-free periods. A select number of credit cards – including the Gem Visa, GO MasterCard and HSBC credit cards – allow you to take advantage of exclusive in-store financing options that allow you to pay off purchases with no interest for up to 60 months.

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Name	Product	Purchase rate	Balance transfer rate	Annual fee	Interest-free period	Amount saved
Bankwest Breeze Classic Mastercard		0% p.a. for 15 months, reverts to 9.9% p.a.	0% p.a. for 15 months	$0 annual fee for the first year ($49 p.a. thereafter)	Up to 55 days on purchases		Save with 0% p.a. on purchases and balance transfers for 15 months (with no BT fee). Plus, a $0 first-year annual fee.	Go to site More Info	Compare	loading Fetching your data...
Bendigo Bank Low Rate Credit Card		0% p.a. for 12 months, reverts to 11.99% p.a.	0% p.a. for 12 months with 2% balance transfer fee	$45	Up to 55 days on purchases		Save with 0% p.a. on purchases and balance transfers for 12 months (with a 2% BT fee).	Go to site More Info	Compare	loading Fetching your data...
Bankwest Breeze Platinum Mastercard		0% p.a. for 15 months, reverts to 9.9% p.a.	0% p.a. for 15 months	$0 annual fee for the first year ($69 p.a. thereafter)	Up to 55 days on purchases		Get 0% interest on purchases and balance transfers for 15 months, a $0 first-year annual fee and no foreign transaction fees.	Go to site More Info	Compare	loading Fetching your data...
ANZ Platinum Credit Card		0% p.a. for 17 months, reverts to 20.24% p.a.	20.24% p.a.	$0 annual fee for the first year ($87 p.a. thereafter)	Up to 55 days on purchases		Receive a 0% purchase rate offer for 17 months and a $0 first-year annual fee. Plus, complimentary overseas travel and medical insurance.	Go to site More Info	Compare	loading Fetching your data...
St.George No Annual Fee		0% p.a. for 12 months, reverts to 20.74% p.a.		$0	Up to 55 days on purchases		Save with a 0% p.a. interest rate offer and a $0 annual fee. Plus, a minimum credit limit of $500.	Go to site More Info	Compare	loading Fetching your data...
BankSA Amplify Platinum		19.74% p.a.	0% p.a. for 15 months with 1% balance transfer fee	$99	Up to 55 days on purchases		Earn 80,000 bonus Amplify Points (worth $350 in eGift cards) when you spend $3,000 in the first 90 days.	Go to site More Info	Compare	loading Fetching your data...
humm90 Mastercard		23.99% p.a.		$99	Up to 110 days on purchases		Enjoy up to 110 days days interest-free on purchases, 0% foreign transaction fees and flexible instalment plan options.	Go to site More Info	Compare	loading Fetching your data...
BankSA No Annual Fee		0% p.a. for 12 months, reverts to 20.74% p.a.		$0	Up to 55 days on purchases		Offers 0% p.a. on purchases for 12 months and an ongoing $0 annual fee.	Go to site More Info	Compare	loading Fetching your data...
David Jones American Express Card		0% p.a. for 6 months, reverts to 20.74% p.a.		$99	Up to 44 days on purchases		Get 50,000 bonus Membership Rewards Points or 25,000 Qantas Points when you spend $1,500 outside DJ in the first 3 months.	Go to site More Info	Compare	loading Fetching your data...
David Jones American Express Platinum Card		0% p.a. for 6 months, reverts to 20.74% p.a.		$295	Up to 44 days on purchases		Earn 70,000 bonus Membership Rewards Points or 35,000 Qantas Points when you spend $1,500 outside DJ in the first 3 months.	Go to site More Info	Compare	loading Fetching your data...

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What to watch out for when making large purchases with a credit card

These are some of the potential issues you might face when using a credit card for large purchases:

• Going over your credit limit. If you already carry a balance on your card, it’s possible you could exceed your credit limit when you make a large purchase (or purchases). If you’re not careful, you could find your card declined or incur overlimit fees.
• Interest charges. Being aware of when your 0% interest promotional period ends, and understanding how interest-free days are calculated, can help ensure that you don’t inadvertently incur interest charges.
• Only making minimum payments. If you just pay the minimum required amount on your card statement each month, your debt can stretch for years and cost you more in interest fees than the original principal amount. Learn how much you should repay each month.
• Other credit card costs. If you’re applying for a new card specifically for making large purchases, consider other fees including the card’s annual fee.

Tips for using a credit card to make large purchases

Having read and understood the pros and cons listed above, it’s important to carefully consider how and when you’ll be using your credit card for large purchases, as well as how soon you can repay the full amount. If you do decide to pay with plastic, here are some tips to help ensure that it stays affordable and convenient:

• Check eligibility requirements for interest-free offers. Whether it’s 0% interest on purchases during the introductory period, interest-free days or an exclusive in-store financing option, research the card’s eligibility requirements and ensure that you meet all the criteria for enjoying your interest-free offer.
• Budget for repayments. This is crucial to help you stay on track when it comes to repayments. With a good repayment plan, some discipline and consistency, a budget for clearing your full balance within the interest-free period can ensure that you stay out of debt.
• Pay more than the minimum each month. Don’t make the mistake of making only minimum repayments. Keep your interest costs low in the long run by repaying as much as you can as early as you can.
• Consider split payments. To further reduce interest charges, you can also pay for a portion of your purchase by cash or debit card, and put the rest on credit.
• Consider a balance transfer. If you’ve already paid for your large purchase with a credit card that charges interest, or if you already carry existing credit card debt, consider a 0% balance transfer card to help you save on interest fees and repay your debt sooner.

While credit cards can be a convenient and beneficial mode of payment, it’s important to weigh up the pros and cons of using them on your larger purchases since these may naturally take longer to repay. If you decide to go with one, make sure you research all available offers before deciding on the best card deal for your needs.