Is Buying a Car on a Credit Card Worth It?

credit cards

In the market for a new car? Whatever the reason may be, cars are an expensive purchase, we all know that.

One question you may be asking yourself is: should I buy a car on my credit card? We’re going to examine the advantages, disadvantages, and tips of the buying a car on a credit card option.

An important note to keep in mind before reading below is that this option is great as long as you can pay your bill in full!


1. Maximize Rewards

The best part about buying a car with a credit or charge card is to reap the rewards of the purchase.

Many of the cards will give the consumer some sort of cash back, or points system for using their cards.

Car buyers should make sure that they can find a card that is right to maximize their rewards for the purchase.

For example, if you use a specific airline rewards card for the purchase, yet never travel on that airline, you’re not benefiting fully from the purchase.

Some new card offers rewards if you spend a certain dollar amount a selected amount of time to earn a large number of points or rewards.

Buying a large purchase on a new credit card can be a quick way to accumulate points. 

2. Credit Card Low Rate Options

There are many credit card options that feature an introductory 0% interest rate for the first number of months.

If you have the funds saved or available to pay off the purchase of a car in the months this offer is available, it is a great way to stretch the amount of time to pay off the car.

Keep in mind the length of the 0% introductory offer. For example, if the 0% offer is good for the first year, that allows you to pay off the vehicle purchased over a course of that year

3. Charge Cards

Charge cards tend to have no pre-set spending limit. Most of these cards are designed to allow for big purchases such as school fees or buying a vehicle.

While there is usually a “shadow limit,” which is an unpublished limit the issuer will let you spend, these limits can often be very high, so charge cards may be able to give you more purchasing power.

However, charge cards are designed to be paid in full every month, which shouldn’t be a problem if you already have the money to buy the car and you’re going for rewards.

These cards usually have good rewards programs and benefits, but also annual fees. A popular example of this type of card is the American Express Platinum Card.


1. Credit Limits

Be aware if you use a credit card that it will cut into their credit limit. If you use most of the credit limit on the purchase of a car, that does not leave much financial room left on the card without asking for a limit increase.

Credit utilization can become a factor and negatively impact your credit score in the short term. Credit utilization is essentially the percentage of a credit card total balance that is taken by debt.

2. Additional Dealer Fees

Before buying a car on a credit card, it is advised to check in with the car dealer to make sure they accept credit or charge cards as a form of payment.

Car dealerships are known to add charges to the final bill when paying in a credit card, so you should do some research before making a purchase.

If a dealer does add charges, ask yourself if the rewards from the credit card will be a bigger benefit than the fee. Unfortunately, most of the time, it’s not.

3. Not Paying In Full

The last disadvantage of paying for a car in a credit card is the fact that many car buyers do not have the ability to pay the card off in full after the purchase but might decide to do this anyways.

You should be realistic and do their research before their purchase, as it’s easy to fall into a “wishful thinking” trap of buying a car on a credit card.

If you can’t pay the car off in full, interest will pile onto the bill. The reason that you might have wishful thinking is that you’ll receive a bunch of rewards.


Buying a car can be a difficult decision within itself. Paying the total cost with a credit or charge card is a great option if you can’t afford to pay the credit or charge card balance in full while maximizing the rewards.

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