r/personalfinance • u/EmojiOfAKeyboard ​ • Nov 13 '22

Putting $4k on credit card for furniture and immediately paying off? Credit

New house so we need new furniture. And we have money saved.

Last time the store didn’t even ask us how we wanted to pay. It was just “okay this is the monthly financing, sign here”

I immediately paid it the next day.

…. But I don’t want to do that.

Instead of swiping my debit card (because I don’t normally have $4k just sitting in the checking account) is it a bad idea to put it on my credit card?

1) my card says I have $7k available in credit.

2) I will pay it off tomorrow

3) I get 2% cash back in rewards

this seems like a no brainer but I wanna know if this is dumb before the sales people hound me into not doing this

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79

u/Cedosg ​ Nov 13 '22

everything possible.

and you are.

you can start with a fidelity 2% card or any of the 2% cards

25

u/lshaw52 ​ Nov 13 '22

I guess I need to research what’s “possible” because clearly I’m missing it. We do groceries, gas, etc, but that’s about it.

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u/[deleted] Nov 13 '22

For an example of a larger expense, my second-highest expense after my mortgage is daycare, over $35k a year, and I put that on a credit card where it gets 2% cash back.

I'd pay my mortgage this way if they'd let me :)

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u/ecohen2010 ​ Nov 13 '22

One year I was able to pay wind and flood insurance for property I managed with my credit card. I spread it over a few weeks but was like $45k in total. Best part was the property association then reimbursed me for the payment so it was just free reward money.

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u/[deleted] Nov 14 '22

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u/[deleted] Nov 14 '22

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u/[deleted] Nov 14 '22

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u/[deleted] Nov 14 '22

Similar thing with reimbursement of business expenses. Though most companies want you to use their card because it makes the logistics easier for them.

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u/krissyface ​ Nov 13 '22

I put daycare and everything else I can (without an up charge for using credit) on my cards and make about $150 a month. I pay it off monthly and never charge more than I can afford. I haven’t paid a service fee in more than a decade but I’ve made a lot off the credit card companies.

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u/[deleted] Nov 13 '22

They make money off you too, they charge the merchant a higher percentage fee to process your transaction

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u/[deleted] Nov 13 '22

[deleted]

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u/Mufasa97 ​ Nov 14 '22

Interesting, I just always assumed the merchant would take the brunt of that higher transaction fee. However, it does make business sense to just bake the additional fees into the original sales price. That sucks for people with no/low credit but, hey that’s life.

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u/[deleted] Nov 15 '22

This is why on large or frequent purchases you should request cash discounts. Might be a higher % discount than your cash back %

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u/[deleted] Nov 14 '22

They charge the merchant that fee either way. It is better for me to keep more of the money, some of which can then be spent at that same local merchant in the future, than for it to go to wherever the Visa executives and shareholders live.

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u/trampanzee ​ Nov 14 '22

I just put a $10k down payment on a car using my credit card. I brought my check book planning to write a check, but when they asked me how I’d like to pay, I asked “how can I pay?”. As soon as they said credit card, I whipped that baby out so fast.

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u/last_rights ​ Nov 13 '22

My daycare charges a 3% fee for using a card.

So I use a Dependent care FSA which saves me 12.5% on taxes and pay the 3% on that card. It's super annoying.

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u/EliminateThePenny ​ Nov 14 '22

Yep. I can't use CC for -

  • Mortgage
  • Daycare
  • Water bill
  • Electric bill

Well, I could, but with the transaction fees, it's not worth it.

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u/JasonDJ ​ Nov 14 '22

Yeah you gotta just float the cash (or from a checking account) and true up at the end of the month/year.

Same is true for healthcare if you can.

I’ve heard of some people that store health expense receipts for several years before they reimburse from HSA. Since you can invest your balance in HSA, if you can float the cash, it makes sense to hold the receipts and reimburse yourself years or decades later, after the market did it’s work.

One of the many ways in which it’s more expensive to be poor.

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u/[deleted] Nov 14 '22

I don't work too hard to keep my receipts for HSA because the nursing home is gonna eat all that up anyway :)

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u/JoinedReddit ​ Nov 14 '22

I would manually file the FSA. I haven't run into a tax-deferred SA that truly required the card. But obviously they encourage it.

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u/[deleted] Nov 14 '22

Yep, that is smart of them. I'll suggest that to my daycare, they should do that, and then I'd change my strategy. DCFSA covers a bit less than 1/6 of what I pay for daycare.

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u/LunDeus ​ Nov 14 '22

Go one step further ans get FSA childcare at 5k annual max pre-tax. Most reimburse your original payments so we just double dip :)

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u/ensui67 ​ Nov 14 '22

If you are fiscally responsible, in America, you should be putting everything on your credit card and paying the statement balance in full per month. You are essentially discounting your life’s expenditure by 2-5%. Those who are not, are pretty much paying more for their goods in their lifetimes. Trick is, to not to count on the $ rebated and do not spend more thinking about the money back.

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u/[deleted] Nov 13 '22

I put my Invisalign treatment on it, $4,000. When we froze eggs via IVF I put every single related expense including medication. Than I used my HSA to reimburse myself so we got the tax benefits plus credit card points. My HOA fees go on our card. If the business will let me charge it, I absolutely will charge it and then pay it off immediately.

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u/thatguy425 ​ Nov 13 '22

Isn’t it better to wait to reimburse yourself from the HSA after the funds have been invested awhile?

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u/[deleted] Nov 13 '22

If you have the funds to pay off 10,000+ worth of IVF costs right away without dipping into your HSA then probably but at the time I did not as I had just put a down payment for the purchase of my condo.

For my Invisalign I have not yet reimbursed myself and won’t need to maybe until we purchase our second home and rent this one out. But if my husbands overemployed thing works out we hopefully won’t need to do it then either.

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u/kaykakis ​ Nov 13 '22

Everything I pay for goes on a credit card except my rent, since there is a surcharge for paying rent with a credit card at my (and most) buildings.

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u/[deleted] Nov 13 '22

Use plastiq. They charge your card.
They send a cheque to landlord.
You pay off card. You earn points.

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u/DogsOutTheWindow ​ Nov 14 '22

Does this work for mortgages?

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u/sweetnsaltyanxiety ​ Nov 13 '22

Some cards give 4-5% back on gas. If you drive often it can add up.

My boyfriend has a large truck that he uses for work and his credit card is 4% back for gas and 3% back for restaurants so between driving to and from work and eating breakfast and lunch 5-6 days a week he gets quiet a lot back just from those two categories alone.

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u/LAHTIDAHTI ​ Nov 14 '22

I'm all in the points game, so have a card for every category. No matter what, earning at least 1.5% on every dollar spent.

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u/[deleted] Nov 14 '22

Utilities, daycare, insurance, etc.

The ONLY thing that isn’t coming off my credit card is my mortgage. And that’s because the bank won’t let me.

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u/firststate ​ Nov 13 '22

Everything. Literally everything. I haven’t used cash for anything in so long I don’t even remember the last time. Mortgage is just about the only thing I don’t put on a CC. I’ll even do the math and if a service (like water bill for example) charges extra for a credit card usage I’ll estimate my bill over the year and the card I’m going to use and pay more.

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u/PM_Me_1_Funny_Thing ​ Nov 13 '22

but that's about it.

Research what's possible? What kind of research could you do here?

If basic essentials like that are the only things going on your CC then it sounds like there's WAY more in your monthly budget that could be paid via credit card...

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u/lshaw52 ​ Nov 13 '22

That’s what I’m saying. Of the bills that I paid, I have no idea who accepts credit cards. That’s the research I’m talking about.

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u/bgi123 ​ Nov 13 '22

https://www.penfed.org/credit-cards

The platinum card is generally what I use for gas and shopping if I am not at costco. 5% cash back on gas and 3% for most groceries.

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u/RemyGee ​ Nov 13 '22

I use it for literally everything that is allowed. I think only mortgage is not allowed.

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u/salamat_engot ​ Nov 14 '22

I have different cards for different things based on what I get back. My credit union has a card with points back for utilities. My Chase Sapphire is for dining and travel.

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u/pokemonprofessor121 ​ Nov 14 '22

My utilities company keys us pay electric, gas, water and sewage of credit without a fee. Out internet is on our credit card - no fee. Cell phone is paid out of our credit card monthly without a fee as well.

All that plus gas, grocery, occasionally eating or pizza delivery, and fun stuff... It adds up.

I pay ouf cards off 2-4 times per month so we don't forget.

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u/rocifan ​ Nov 13 '22

Can i ask if you get charged credit card fees and if yes how much and how often? I only have a debit card and am terrified to get a credit card

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u/timsstuff ​ Nov 14 '22

Savor has a $95/year fee, Quicksilver $39, Spark $150, Amex $95. So I suppose I should subtract those from my total - $4485 so far this year.

I do not ever pay interest, all cards get paid in full before the due date without exception.

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u/[deleted] Nov 14 '22

Can you link some options.

I have the apple CC. And I use it occasionally and pay it off… should I keep it and start getting just about everything on it?

(Also I know don’t take financial advice too literal on Reddit)

But humor me

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u/Cedosg ​ Nov 14 '22

you can start with a no annual fee 2% card (fidelity, sofi, double cash).

next get a couple of 5% rotating categories (chase freedom flex/discover it/us bank cash +/ citi custom cash

i would also get an amex card with no annual fee. their amex offers can be surprising.

then proceed on to get others for the signup bonus. the goal is to keep your no annual fee cards open so that you build your credit history.

side note: i have a now discontinued ihg card for $49 which gives me an annual hotel stay every year.

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u/timsstuff ​ Nov 14 '22

My favorite is the Capital One Savor card, 4% cash back on dining and entertainment (this includes concert tickets, festivals, etc.), 3% groceries, 1% everything else.

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u/JasonDJ ​ Nov 14 '22

No no no you start with chase. 5/24 is still a thing. UR is still one of the best rewards programs IMO.

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u/Moudy90 ​ Nov 14 '22

My motto is that if I am spending money, I might as well be making some money while I do it. Everything that possibly can go on a card, goes on a card for me.

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u/bct7 ​ Nov 14 '22

Everything that does not add a CC fee is the way.

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u/timsstuff ​ Nov 14 '22

Yes I get irrationally angry if I have to pay with real money for something lol.