Car Finance Talk

For those that can afford to pay for their car in-full upfront, one popular practice has been to pay for the entire cost using a charge card. Why? Because charge cards typically offer rewards on spending that equal out to be around 1% or more of the purchase price. Since a charge card’s balance is paid in full each month, that means no interest is incurred, but the buyer still gets the rewards.

This technique can be particularly rewarding when buying a pricier car. If the vehicle were to cost $50,000, then that would equal out to be $500 in rewards. Depending on the card, the rewards may be even higher. For example, the American Express Platinum gives points that are worth more than the standard 1%. Sometimes, the American Express Platinum Card is even known to give extra bonus points to big spenders, which makes this technique all the more alluring.

As mentioned, this strategy only works for those that have the ability to pay for the full price of the car with cash. However instead of giving the deal cash or writing a check, you are simply funneling the transaction through the charge card so you can get rewards for doing so. Since charge cards and credit cards are expensive for the merchant to process, unfortunately many car dealers have put a cap on the amount a customer can put on their card.