Automotive credit cards are credit card products that are issued by automakers as a way to encourage loyalty in their customers and to basically nail down future sales far in advance. These cards differ in the exact way they work and the limits on the rewards you can earn as a card holder, but in their essence they allow you to bank points toward savings on your next vehicle purchase up to a certain set limit. Usually that limit is expressed in a percentage of the overall price of the vehicle, and usually automakers also limit the models that are eligible for the program. But getting automotive credit cards can be a good idea if your preferred brand offers one and if the program offers good rewards.
Choosing Auto Rewards Credit Cards
There are different programs run by different manufacturers and consumers need to base the choices they make in whether to participate and which programs to choose on the value offered by the program. The first thing we need to look at is the total discount being offered. In this area there are some huge disparities among the manufacturers, with some going as high as 3 percent and some capping out as low as half a percent off the price of the vehicle. There are also cards out there that are not specific to a single manufacturer and that will apply a discount toward any new car purchase. This is often a first step before taking car insurance finances responsibility. Obviously, these are great for consumers who are not brand loyal and don’t even know what they might end up buying ahead of time.
Other cards do not even feature points that go toward the purchase of a vehicle, but instead rack up savings for parts and services for consumers, so it is important to understand exactly what a card actually includes as its main features before you choose it and potentially rack up a balance on it. And this also points to another factor that we all need to keep in mind. Saving 3 percent off the price of a new car doesn’t mean a whole lot if you are paying 20 percent interest on a balance you carry from month to month. These are probably cards we should pay in full each month rather than carrying a balance if we’re really going to get a financial benefit from them.
Saving Money with Auto Credit Cards
Spending money you otherwise wouldn’t spend is a bad choice for those who are trying to build up points on these cards. Consumers should be disciplined about the things they buy and the way they use them. For example, it is smart to buy things that you already purchase every month, and just put it on these cards instead of some other card or paying cash for it. That way you get the points and when the bill comes due, you just pay it in full, so you get the reward without any cost. It is also important to check into the annual fees that cards charge.
Even if you never carry a balance over from month to month, it can still cost you some money just to have a card if there are high annual fees. Take a look at all of these details and make sure to only choose cards that offer reasonable interest rates and low annual fees or none at all. The best auto credit card rewards scenarios as they relate to car buying are usually those for folks who are brand loyal or who already know in advance what kind of vehicle they are going to buy.