Can you buy a car with a credit card?

Yes, it’s possible to make a car down payment with a credit card but it depends on your dealer’s policy. Some dealers don’t accept plastic, because the transaction fees eat away at their profit margins. Others accept credit cards but charge a fee for the transaction. Plus, if your dealer is willing to take a credit card for a down payment, it will only work if you have a high enough ... read full answercredit limit, unless you are spreading the payment over several cards.

Even if you can use your credit card for a down payment on a car, it doesn’t necessarily mean that you should. A purchase that large could mean steep interest charges. Also, depending on how high your credit limit is, putting a down payment on your card could hurt your credit score by increasing your credit utilization ratio.

When to Make a Car Down Payment with a Credit Card

• The dealer accepts credit cards and doesn’t charge a lot extra for using a credit card.
• You have a plan for paying it off that allows you to save money compared to other payment options. For instance, this could include using a 0% credit card and bringing your balance to zero by the time regular rates kick in.
• You’re putting the payment on a card with a large spending bonus or other valuable rewards. This assumes you’ve got the financing side of things figured out. Some 0% cards offer rewards, for example, or you could just pay your balance quickly.

In those circumstances, making a car down payment with a credit card could be a good idea. But it’s fairly rare for all of those factors to come together.

You cannot use a credit card for a down payment on a house. Home sellers and lenders do not accept credit card payments directly. Mortgage lenders typically require down-payment funds to spend at least 60 days in a bank account to get “seasoned.” Besides, credit card limits generally are not high enough to accommodate a down payment for a house.... read full answer

Even if you could use a credit card for a down payment on a house, it is not a good idea. It would almost certainly result in high credit utilization and an increase in your debt-to-income ratio. That could cause a drop in your credit score right when you’re applying for a mortgage, which could in turn cost you thousands of dollars over the life of the home loan if the lower score results in a higher APR. It could also cause your mortgage application to be rejected.

If you really want to use a credit card for a down payment on a house, you could potentially do so in a very roundabout way. For example, apps like Venmo make it possible to move money from a credit card to a friend’s bank account, and your friend could then transfer the funds to your bank account to get seasoned for a down payment on a house. But there are fees and daily limits to contend with. The other method is to take out a cash advance, which is very expensive and won’t give you much spending power. A credit card’s cash advance limit usually is a lot lower than its purchase limit, after all.

Here’s why you shouldn’t use a credit card for a down payment on a house:

• Major lenders do not accept down payments via credit cards or third-party money-sharing apps.
• Mortgage lenders typically require down payment funds to spend 30-90 days in a bank account to get “seasoned.” Sixty days is most common.
• Fannie Mae underwriting standards require at least two months of deposit-account history to verify cash used as a down payment. In unusual circumstances, such as through Fannie Mae’s HomeReady program, “cash-on-hand” can be used without “seasoning.”
• You could do a cash advance, via either an ATM withdrawal or a convenience check, to use for a down payment. But that’s too expensive to make sense. Cash advances come with 3%-5% fees and high interest rates (over 20%). Interest also starts accruing immediately, with no grace period.
• A balance transfer credit card won’t help you make your down payment, but it could save you some money after the fact. You’ll have to take out your mortgage first, then transfer part of that balance to a credit card with a 0% balance transfer APR and a low transfer fee.

In the end, using a credit card for the down payment on a house isn’t the best idea, if it’s even possible. You won’t be able to pay most official closing costs with a credit card, either. But there’s usually a wide range of expenses associated with moving into a new home, and you can charge many of them to a credit card. They may include things like inspections and appraisals, for example.

It’s better to pay off a credit card first, before a car loan, in almost all cases. Credit cards tend to have far higher APRs than car loans. The average APR for all cards in circulation is around 15%, and the average for new offers is around 19%. With car loans, the ... read full answeraverage APR is around 3% - 6%, depending on what type of lender finances the loan and whether the car is new or used.

It’s best to pay off debt with the highest APR first because the higher the APR is, the faster interest builds up. That’s especially true with credit cards, whose interest compounds daily. With car loans, you generally pay interest only on the principal and not previous interest charges, too. However, a car loan may not be cheaper than a credit card 100% of the time. So focus on paying off whichever debt is the costliest first.

Whichever balance you decide to focus on paying off first, your credit card or your car loan, make sure to continue making at least the minimum required payment on the other each month, too. Otherwise, you could owe late fees and suffer credit score damage. And if you miss payments on your car loan, you could potentially lose your car.

There is another option, though. You could pay off both your credit card and your car loan at the same time by taking out a new personal loan to consolidate what you owe. But that’s only worthwhile if you can get a personal loan APR that’s lower than your credit card and car loan APRs. Beating your credit card’s rate should be easy enough, but car loan APRs are already pretty low. Plus, you’ll need to be able to take out a loan that’s at least the size of your existing debts put together.