Top Credit Cards for Buying a Car: Maximize Your Rewards

Purchasing a car is often one of the largest expenses you’ll make, and while it typically depreciates in value the moment you drive it off the lot, there are ways to make this investment more rewarding. By using the right credit card, you can earn valuable points, miles, or cash back on your purchase. Whether you’re making a down payment or buying a car outright, certain credit cards can enhance your buying experience and help you meet welcome offers.

Here’s a breakdown of some of the best credit cards for purchasing a car and key considerations to keep in mind.

1. The Platinum Card® from American Express

– Annual Fee: $695
– Welcome Offer: Potential to earn up to 175,000 bonus points after spending $8,000 on eligible purchases in the first six months (offers may vary).
– Earning Rate: 1 point per dollar spent on car purchases.

This card is an excellent choice for large purchases due to its no preset spending limit. While this doesn’t mean unlimited credit, it allows for flexibility when making significant transactions like a car down payment. However, cardholders must pay the balance in full each month to avoid accruing interest. If you’re looking to maximize your rewards, it’s advisable to pay off your balance quickly to retain the value of your earned points.

2. The Business Platinum Card® from American Express

– Annual Fee: $695
– Welcome Offer: Earn 150,000 bonus points after spending $20,000 on eligible purchases within the first three months.
– Earning Rate: 1.5 points per dollar spent on purchases over $5,000.

Similar to the personal Platinum Card, this card also features no preset spending limit and is ideal for significant purchases. If your down payment is $10,000, you would earn 15,000 points, which can be quite valuable. Ensure your purchase meets the $5,000 threshold to take full advantage of the rewards.

3. The Blue Business® Plus Credit Card from American Express

– Annual Fee: $0 (first year introductory fee)
– Welcome Offer: Earn 15,000 bonus points after spending $3,000 in the first three months.
– Earning Rate: 2 points per dollar on the first $50,000 spent each calendar year (then 1 point).

For those looking for a no-annual-fee option, this card stands out by offering a competitive earning rate. With a 0% introductory APR for the first 12 months, it’s a great option for financing a car purchase without immediate interest charges. Just be mindful of the preset spending limit.

4. Chase Freedom Unlimited®

– Annual Fee: $0
– Welcome Offer: Earn $200 cash back after spending $500 in the first three months.
– Earning Rate: 1.5% cash back on all purchases.

This card is perfect for those who prefer cash back. A $15,000 car purchase would yield $225 in cash back, which can be converted into valuable points if you have an Ultimate Rewards-earning card. Plus, it offers a 0% introductory APR on purchases for 15 months, giving you time to pay off your purchase without incurring interest.

5. Citi® / AAdvantage® Platinum Select® World Elite Mastercard®

– Annual Fee: $0 introductory fee for the first year, then $99.
– Welcome Bonus: Earn 80,000 bonus miles after spending $3,500 in the first four months.
– Earning Rate: 1 mile and 1 Loyalty Point per dollar spent.

This card is particularly beneficial for American Airlines frequent flyers, as it allows you to earn Loyalty Points towards elite status. If your dealership permits a large down payment on this card, it can significantly boost your Loyalty Points.

Key Considerations When Using Credit Cards for Car Purchases

While using a credit card for a car purchase can be advantageous, there are several factors to keep in mind:

1. Dealership Policies: Not all dealerships accept credit cards for the full purchase price. Many only allow credit cards for down payments. It’s advisable to call ahead and confirm their policies.

2. Transaction Limits: Dealerships may impose limits on how much can be charged to a credit card. You might be able to negotiate a higher limit, as I did, increasing mine from $5,000 to $8,000.

3. Fees: Some dealerships may charge a fee for credit card transactions. It’s worth asking whether there will be any additional costs associated with using a credit card.

4. Credit Utilization: Charging a large amount to your credit card can impact your credit score due to increased credit utilization. To mitigate this effect, aim to pay off your balance as quickly as possible.

5. Interest Rates: If you choose a card with a 0% introductory APR, you can make smaller payments without incurring interest. However, if your card has a regular interest rate, it’s best to pay off the balance in full to avoid additional charges.

Using a credit card to purchase a car can be a strategic move to earn rewards and meet spending requirements. However, it’s essential to do your research and understand the policies of your chosen dealership. By selecting the right credit card and being aware of the terms, you can make your car buying experience more rewarding.

Remember, while the potential for rewards is enticing, always prioritize your financial health by managing your credit wisely. Happy driving!