I plan to buy a car soon and I have the cash. Should I use my credit cards to pay for them?
I have enough cash to pay off a car I'm planning to buy.
However, instead of using cash on a debit card, I thought of using my credit cards instead so I can earn points on them.
Are there any drawbacks to this that I'm not seeing yet?
I sent out emails to dealers asking if they accept credit cards. Most of them replied and said that they charge 2% or so for credit card transactions, and 2% of a k-ish car is 0, and I don't think frequent flyer points are worth that much.
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No. Only use your credit card when you are money rich and time poor.
As you've noted putting the transaction through VISA, Mastercard (etc) will cost them ~0 in transaction fees.
A bank cheque goes for ~.
Is an hour of your time worth 5/hr? Let's be generous and say that all-up it takes you an hour to physically get down to a bank branch during business hours. You pay your ~ for a bank cheque from the teller and take that to the dealer. Save ~5.
Obviously, you only save that money if, when negotiating exactly what number to put on the cheque, you factor this in by pointing out that by getting a bank cheque you're saving the dealer 0 in transaction fees.
One strategy is to haggle hard without mentioning it until you agree to an exact figure and it seems to be all final. Then spring it and shave another 2% off the total. Alternatively, mention it early and they'll be factoring into the negotiation all along and allow you to drive them a little bit lower than when paying by CC.
(Beware that most AU banks regard an over-the-counter event as a sales opportunity so don't be caught unaware: their kind offer to help get a better interest rate, or credit card—or whatever it is—it is not necessarily you they're trying to help).
Biggest drawback: if you fail to pay the credit cards immediately you may get zapped with more interest than you could recover in points. There's also the question of whether the dealer accepts credit cards; they may not. Find that out first, then if you still want to do this consider prepaying into the credit card account so you can't miss that payment.
You can use your credit card to accumulate points, and pay it off with your debit card right away.
The downside is the ~20% APR when you accumulate credit card debt.
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