Why it's a good choice: The Amex Platinum Card is built for large purchases such as a new vehicle in part because it doesn't come with a preset spending limit*. While this doesn't mean you have unlimited funds available, you're more likely to be able to charge a larger purchase to the Amex Platinum versus a card with a lower, set credit limit.
Also keep in mind that American Express has a vehicle purchasing program that aggregates dealerships that will accept your American Express card. However, the description of the program says "All participating Certified Dealers on the site accept the American Express Card for at least $2,000 and up to the full purchase price." So you may not be able to put your entire vehicle purchase on the card. Be sure to give the dealership a call ahead of time to maximize your card.
*No Preset Spending Limit means the spending limit is flexible. Unlike a traditional card with a set limit, the amount you can spend adapts based on factors such as your purchase, payment, and credit history.
Why it's a good choice: While the two previous cards both have large annual fees, the Blue Business Plus Credit Card from American Express does not have an annual fee. You'll earn 2 Membership Rewards points per dollar on the first $50,000 in purchases each year and 1 point per dollar afterward. Membership Rewards points are extremely valuable, as they can be transferred to 21 airline and hotel partners, including Air Canada Aeroplan, ANA Mileage Club and more.
Why it's a good choice: The Chase Freedom Unlimited is a great card for earning valuable cash back or Chase points on your new ride. You'll earn a decent 1.5% back on your car purchase, but that becomes more worthwhile if you also have a credit card that earns Chase Ultimate Rewards points, such as the Chase Sapphire Preferred Card.
TPG values Ultimate Rewards points at 2 cents each, so if your new vehicle were to cost $20,000, that's $600 worth of points back in your pocket with this card. The Freedom Unlimited also comes with 0% intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 19.49% - 28.24% Variable If you're able to pay off your car before that 15 months is up, this is a great way to finance it and earn rewards at the same time.
Why it's a good choice: Besides the fact that 2x is a great return on a large purchase such as a car, the Capital One Venture Rewards card is also currently offering a solid sign-up bonus. If you spend $4,000 on purchases in the first three months from account opening, you'll get 75,000 bonus miles (worth $1,388 according to TPG's valuations). If a car dealership is willing to accept a credit card as a down payment for the purchase of a vehicle, this would be a great way to rack up some serious points that could be redeemed in the future.
The maximum amount you can put on a credit card depends on the car dealership. CreditCards.com has reported $3,000-$5,000 as a common limit for how much a dealership will allow you to put on a credit card. But if you're lucky (and a solid negotiator) like TPG's former editor Richard Kerr, you may be able to put an entire new car purchase on a rewards card such The Platinum Card from American Express -- though it admittedly took a bit of haggling and shopping around before he was able to convince a dealership to allow this.
If you're in the market for a vehicle and looking to put the entire purchase on a credit card, be sure to call ahead and speak with the finance manager of the dealership. Some dealerships have a hard rule of not accepting credit cards for vehicle purchases, while others are glad to accept them.
Dealerships have to pay merchant fees on the charge, which range from 1%-4% and cut into their bottom line. If the dealership is willing to reduce the price of the car to get you the value of the points you would have earned through your rewards card, you may want to consider that option, too. In essence, you could use the card to negotiate a lower price.
This will differ from dealership to dealership. While some places always charge a fee on credit card purchases, others may not pass along the fees to consumers. And a lot of the time, car dealerships aren't great about being upfront about the fees they charge.
I reached out to three different dealerships in the Charlotte area hoping to confirm whether or not they would allow me to charge at least a portion of a car purchase to a credit card and whether that purchase would come with a fee, but I was unable to get a straight answer without coming in to talk about a specific model I was interested in. That tells me that it's either up for discussion (a lot about the car-buying process is up for negotiation), or they do charge a fee and hoped the vague answer wouldn't deter me from coming in to look around.
Whether you can pay a portion of the price with your credit card depends on the dealership. Some dealerships will allow you to charge the down payment or just a small portion of the overall purchase price to your credit card. Others may allow you to charge the entire amount.
Whether you need to pay your full balance depends on your circumstances. If you charge a car purchase to a credit card offering 0% APR on purchases, you may be able to keep a balance without additional costs. If your credit card charges large interest fees then you will want to pay off your balance in full as soon as possible.
Using a credit card to buy a car could have a negative impact on your credit if you end up carrying a balance. If the card balance isn't paid down by the statement closing date, it gets reported to the credit bureaus. Depending on how much available credit you have across the board, a large card balance due to a car purchase could increase your utilization rate, which in turn can negatively affect your credit.
After taking them for a test drive, we settled on the following three credit cards as the best credit cards for buying a car, based on high or no spending limits, generous points programs, and other rewards meant to maximize the car-buying investment:
The credit limit on your credit card, sometimes called a spending limit, credit line, or credit limit is the maximum amount of money you can spend on your credit card without facing penalties. To get a higher credit limit typically requires the following:
Everyone these days takes credit cards, right? Wrong. The fact of the matter is not all car dealerships take credit cards, but some do. So, before heading to the lot with your brand new credit card from our ranking, you should call ahead and ask. With about a billion credit card transactions occurring per day all over the world, why would car lots want to miss out on those sales? The answer to that question is fees.
Just like any retailer, car dealerships pay a processing fee on their credit card transactions, and transactions as large as a car purchase, and with credit card fees ranging from between 1% and 4%, those fees can add up to a lot. And since most dealers only make about 5% on profit on each transaction, paying a 4% processing fee eats up most of their margin.
The best cards for buying an automobile while also maximizing your cash back points is the Chase Freedom Unlimited. In addition to no annual fee, the Chase Freedom Card also offers Chase Points, which can amount to about 1.5% back on your purchase. This adds up to a lot on a purchase as expensive as a car, or about $600 bucks back on a purchase of about $20K.
In addition, Chase offers a $200 bonus on up to $500 in purchases made within the first three months of card ownership. If you have another Chase Card offering Chase Ultimate Rewards, that initial $200 points can be transferred to 20,000 reward points. Those points can be used at select hotel partners on your first road trip.
Offering a high spending limit and sign-up bonus, especially on large purchases like an automobile, the Capital One Venture Rewards Credit Card is the next credit card in our ranking. Details on the generous sign-up bonus offered by Capital One include the following:
The annual fee on the card is also quite affordable at only $95 and there are no foreign transaction fees. Users of the card can also enjoy credits of up to $100 on Global Entry or TSA PreCheck. Further incentive to choose Venture Rewards include no minimum redemption amount, new balance transfer partners and an improved transfer ratio, and a whole host of travel perks, including secondary car rental insurance, travel accident insurance, and extended warranty protection.
This card offers superior points earning rates if you spend frequently on travel and dining out. The $300 travel credit justifies much of the annual fee, and redeeming points for travel on Chase Ultimate Rewards.
The Platinum Card is destined for frequent travelers who intend to fully leverage the rich set of luxury travel benefits and Platinum Concierge service. In the right hands, the classic status card's staggering annual fee is well justified.
This card has the brawn to handle just about all of your credit card spending needs without an over-inflated price tag. The card has an annual fee of $0, yet comes with a pumped-up earnings structure that covers a wide swath of expenses including travel, drugstores and dining plus rotating quarterly bonus categories in areas many households are likely to find appealing.
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