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

[u/EmojiOfAKeyboard]

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

[u/[deleted]]

That’s not incorrect, but if we’re going to go that way, just like the people holding CC debt are in effect paying my rewards, I’m paying for health, home, and auto insurance that I’ve almost never used, and others have benefit from my payments more than I have.

[u/dubnr3d → u/[deleted]]

You're just describing insurance, which you arguably need. You don't have to use credit cards.

[u/Nowaker → u/dubnr3d]

You don't have to have insurance. Insurance is only for those who can't afford a sudden hit, and decide to pay a fee for safety. For example: I can't afford a sudden hit of $60K so my new truck is insured for theft/collision. But my old $10K mini van isn't because whatever.

[u/bangbangtangwangfang → u/Nowaker]

Man, given how cheap insurance is, it seems crazy to me to not insure a 10K vehicle. I drive a 2k beater and actually have it fully insured.

[u/Nowaker → u/bangbangtangwangfang]

Insured a $2K vehicle for collision/theft? Are you insane?

[u/bangbangtangwangfang → u/Nowaker]

Well, am I? Let's talk numbers!

Annually I pay the following: Comprehensive (theft, hit a deer, etc): $24.44, Collision: $91.32, Replacement (+20% of cash value): $18.68 = $134.44/year. This is on top of liability, towing, etc. that you should carry on any car.

Deductible is $500.

So if my cars value is $2000, ($2000 * 1.2) - 500 = $1900/134.44 = ~14 years break even.

Now in actual fact, the cash value would probably come out to more like 3k given the current market, so more like 20 yrs break even.

You might be about to argue that if I make a claim, my rates will go up! And you would be right!!! But how much? Let's say they double it. Well, that cuts my break even to 7 years.

Sooo.... I would say it's worth it. What do you think? Happy to get other viewpoints, but the peace of mind for me knowing I can always go get another beater basically for free is pretty nice. I carry this insurance against the event of a total loss, which doesn't take much for such a low value car.

Just curious, did you ever get quotes on full coverage for your minivan? I used to be of the same mindset you have until I actually ran the numbers.

[u/South_Dakota_Boy → u/Nowaker]

I’m not insured especially to protect my investment in my vehicle. I’m insured so I don’t get sued for everything I’m worth if I cause an accident.

But your point still stands. If I had a couple million laying around I wouldn’t really need the insurance.

[u/Nowaker → u/South_Dakota_Boy]

We're in full agreement. I do have $500K liability insurance on all of them because I can't afford a sudden hit of $500K.

[u/pocketbookashtray → u/South_Dakota_Boy]

Sadly, if you had millions laying around, then someone would sue you for even more. It's a screwed up system, that the financially successful often have to pay more than the deadbeats if they cause an accident.

[u/Twodawgs_ → u/pocketbookashtray]

I have millions laying around. I have 500/300 liability on my cars. I don't have comp/collision on my beater. I also have an umbrella policy for 2 million (covers more than just the cars)