Welcome to the Points Pro, where I answer your credit cards and travel rewards questions each week. If you have a question you’d like answered, you can submit it here.
This week, CNBC Select editor Dan asks:
Can you buy a car with a credit card? If so, is it ever worth it?
Dan recently purchased a car and wants to know whether it’s possible to pay for it with a credit card and earn a bunch of points. But more than that, does it make sense to do this?
Although it’s possible to find a dealer that will accept credit cards for a car purchase, it’s not common and, for a myriad of reasons, often doesn’t make sense.
How to buy a car with a credit card
Can you buy a car with a credit card?
It is possible to buy a car with a credit card, but you may have to shop around to find a car dealer that accepts credit card payments. It can be difficult to find a dealer that will let you put the full purchase price of a vehicle onto your card.
A more realistic scenario to pay some or all of your down payment with a credit card. This can earn bunches of rewards, especially if you’ve recently opened a new card; big purchases can help you qualify for welcome bonuses.
But there’s a big caveat: You’ll typically pay a fee when using a credit card to purchase a car. Even if the dealer doesn’t explicitly list a 1% to 3% surcharge, it may already be baked into the price. Seemingly small fees can add up quickly with a purchase as large as a car. For every $10,000 you spend on a vehicle, you could pay $100 to $300 in card fees.
Read more: Are credit card rewards worth it if you pay a surcharge?
Does it make sense to buy a car with a credit card?
It rarely makes sense to purchase a car with a credit card. Even if you find a dealer that accepts credit cards, you’ll still need a large credit limit. Making a down payment (or part of it) with a credit card is probably as far as you should go. Even then, I believe most people are better off keeping it simple and not bothering with the math.
The fees will usually offset the rewards you earn, and credit card APRs are typically much higher than auto loan interest rates. It only makes sense to pay for a car with your credit card if you have the cash to pay off the balance before you pay interest.
0% intro APR credit cards to consider
If you want to make a down payment (or part of it) with a credit card, an intro APR credit card can help.
The Wells Fargo Reflect® Card comes with a 0% intro APR for 21 months on new purchases and qualifying balance transfers from account opening (after that, a variable 17.49%, 23.99% or 28.24% APR applies). Balance transfers made within 120 days qualify for the introductory rate, and a balance transfer fee of 5%, minimum $5, applies.
The Wells Fargo Reflect® Card is one of the absolute best cards you can apply for if you want to save on interest and pay down debit quickly thanks to its extra generous intro-APR offer on purchases and qualifying balance transfers.
- Incredible intro-APR for purchases and qualifying balance transfers
- No annual fee
- Cell phone insurance: up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible
- No rewards
- No welcome bonus
- High balance transfer fee
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 17.49%, 23.99%, or 28.24% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5.
- $0 annual fee.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
- Through My Wells Fargo Deals, you can get access to personalized deals from a variety of merchants. It’s an easy way to earn cash back as an account credit when you shop, dine, or enjoy an experience simply by using an eligible Wells Fargo credit card.
Balance transfer fee
Foreign transaction fee
If you don’t want to sacrifice rewards, a card like the Chase Freedom Unlimited® (see rates and fees) earns at least 1.5% cash back on all purchases and offers a shorter zero-interest period. You can take advantage of a 15-month 0% intro APR offeron new purchases and balance transfers, and an 18.24% to 27.74% variable APR applies after.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus. Plus, if you pair it with a premium Chase credit card that allows point transfers, you can convert your cash back into flexible travel rewards.
- Users get a high rewards rate and strong welcome bonus
- Purchases and balance transfers receive an intro APR
- No annual fee
- Has a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can use points to redeem for cash through an account statement credit or an electronic deposit into an eligible Chase account located in the United States!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% – 27.74%.
- No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
The credit cards with the longest intro APR offers typically don’t earn rewards (as you can see with the Wells Fargo Reflect), so the value is in low-cost financing. Maybe you invest the money you would have spent on the down payment in a high-yield savings account. Your card issuer won’t charge you interest right away, you’ll have to factor the card fees into your analysis.
It’s also a good idea to have a plan to pay off the card balance before the intro APR expires so you don’t rack up extra interest costs. You may earn more in interest than you paid in card processing fees, but how much more? It may be less than you think and not worth the effort or risk of carrying a credit card balance.
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