Should I put $10,000 on a credit card and pay it right off?
July 28, 2011 7:51 AM   Subscribe

I am thinking about buying $10,000 worth of appliances and entertainment-related products for my house. Should I put it all on a credit card?

So I'm doing a major overhaul in my house and buying a lot of new stuff. I wanted to avoid some sort of financing plan to pay for this stuff. Right now I have around $40,000 combined in my savings and checking accounts (I know, I know, I should be investing it instead). My Mastercard has a credit limit of $15,000.

Would it make sense to put all this stuff on my credit card and then pay it off the very first month? Would that look really good on my record, credit-wise? I don't want to get put on some kind of financing plan and then have to pay interest. Obviously I could just pay cash too, but I would like to really maximize the potential for boosting my credit rating. Thanks.
posted by anonymous to Work & Money (19 answers total) 3 users marked this as a favorite
It won't boost your credit unless you pay it off over time. If you pay it off the next month the credit agencies assume you didn't really need to borrow it.
posted by milarepa at 7:54 AM on July 28, 2011

If you think you can pay it off-- you should apply for another credit card that has bonus offers (i.e 5% back etc). You can make $500 or have enough for a couple free flights. You'll probably get a higher credit limit.
posted by sandmanwv at 7:54 AM on July 28, 2011 [1 favorite]

You should do it for the reward points / miles. Worth a bare minimum of 1%, and you can likely get as much as 5% if you pick the right card.
posted by Perplexity at 7:56 AM on July 28, 2011 [5 favorites]

Credit builds up as payments over time, so if you want some benefit off this, get a benefits card. Nerdwallet is a good comparison tool.
posted by griphus at 7:57 AM on July 28, 2011 [1 favorite]

nthing "do it for whatever perks and additional warranty you get from your credit card."
posted by holgate at 7:58 AM on July 28, 2011 [1 favorite]

Only put it on a card if you can (a) pay it off (which it seems you can) and (b) will get some sort of rewards. Blue Cash may be a good choice.
posted by jeffamaphone at 8:00 AM on July 28, 2011 [2 favorites]

In the UK if you buy on a credit card, you get tons more rights. If the stuff goes wrong, it's better to buy on a credit card. So I'd check if that applies here.
posted by devnull at 8:02 AM on July 28, 2011 [3 favorites]

In your case you have the assets to pay if off... so if you get a reward for the purchase, yes, I would do it.
posted by brownrd at 8:03 AM on July 28, 2011

Nthing the perks thing. I picked my AMEX Blue Cash card after a decent amount of research. Lifehacker (or perhaps the forums) generally has decent info regarding what credit card is best in a given situation.

Also, don't forget that you may be eligible for additional warranty perks/time if you put it on a certain card. I know this to be the case for electronics/computers/gaming consoles. So for that sort of purchase it might be well worth it in and of itself.

I'd say as long as you get a card without fees/dues it's a complete win/win.
posted by RolandOfEld at 8:07 AM on July 28, 2011 [1 favorite]

Just another thought, if you are paying cash you are in a great negotiating position with the price especially for $10K worth of items. If only because if you pay by credit card the store will have to pay fees on that I am not sure what the rates are in the US but in Australia stores pay about 3.5% per transaction, so there is a $350 saving for both you and the store there, but you should be able to negotiate that up to more savings without too much effort. If you can't get a discount you might be able to get them to throw in extras like cables wall mounts etc instead. Cash is a fantastic bargaining tool.

Having said that, if you have already haggled them down in price and you can get warranties and things through credit cards it might be worth paying for them that way.
posted by wwax at 8:10 AM on July 28, 2011

I too would like to emphasis reward points - use 'em if you got 'em.

In my readings I believe you should never use more than 30% of your available line of credit. However, since you have the money to pay it off right away - the over 30% of your credit use would not appear on your credit reports paid it off right away. Therefore, technically it wouldn't help/hurt your credit score.

Using the credit card would also help you with warranty issues later. Some cards extend the manufacturer's warranty by a year. I believe that is AMEX cards. Read your credit terms accordingly.

Congratulations on having the money to pay with cash. What an awesome saver you are!
posted by BuffaloChickenWing at 8:15 AM on July 28, 2011

A lot of department stores have cards, and you often get 10% off the first time you use it, so it might be worth signing up for a Sears card and getting your appliances there - as it'll save you $1,000 dollars.
posted by backwards guitar at 8:49 AM on July 28, 2011

Nthing rewards. I do this all the time on a card that I get 2% on. I also have some card that rotate 5% categories (like Discover, for example) so if you time it right, you can really save a bunch as long as you pay it off right away.
posted by rabbitrabbit at 9:03 AM on July 28, 2011

On the paying cash suggestion, this otherwise fairly quiet and mild mannered old biddy has scored some excellent deals* by saving up and offering cash, even at nationwide chain stores.

Go on a quiet weekday morning, you often have to get a manager involved but stand your ground and be prepared to walk away if they don't offer/agree to your demands request for a substantial discount.
posted by humph at 10:27 AM on July 28, 2011

You should be buying EVERYTHING with a credit card with rewards / points......if you can pay it off every month. There is absolutely no reason ( at least in my peanut brain ) to use a debit card over a credit card if you have the cash to cover the credit card.
posted by jasondigitized at 11:35 AM on July 28, 2011 [1 favorite]

You should totally do this (unless you really can get a discount for cash, and you don't care about losing whatever benefits your credit card gives you, e.g. an extended warranty). PlasticIQ is great for finding the best rewards based on the type of things you buy.

It is indeed possible that waiting for your next statement before paying off the bill (interest free of course) will have a greater positive effect on your credit rating.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 11:38 AM on July 28, 2011

If you go the store card route, beware the 0 percent financing for a year route. Especially if you're trying to establish credit, it can sound like a good idea to borrow 10k for a year. But if you don't pay in full by the end of that year? Typically these contracts are written to charge you all that interest you didn't pay, at a penalty rate you paid no attention to. If you do pay in full in time, you're golden.

So these are yet another deal that exploit the naive in favor of the clever. But most everything banking related is these days.
posted by pwnguin at 6:25 AM on July 29, 2011

Yes - in the UK at least, store car APRs are prohibitive, verging on sub-prime. If you can pay it off within a month, or quickly enough for the discount to work for you, do it, but steer clear otherwise.
posted by mippy at 5:16 AM on August 5, 2011

*store card! I don't know how much a store car costs...
posted by mippy at 5:16 AM on August 5, 2011

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