Best credit card for large purchase

[Jacob F]

Hi folks,

we will have a significant expense of ~16k USD coming up for a medical procedure that will not be covered by our health insurance.
I'm currently starting to research my options regarding using the best credit card arrangement for the purchase, to get at least the best benefits out of it..
I'd be glad to get any feedback on which credit cards give the best benefits for such large sum purchases, or any other way to finance it even better.

We can pay the costs out of pocket through our bank account and I also have an HSA account that has enough money in it to pay for the procedure.
At this point though I think that both cash and HSA are not the preferred options (HSA as the best retirement account should remain untouched and Cash doesn't get any benefits either).

Thanks in advance!

[Bracken_Joy]

Will you be able to pay off the 16k at the first billing cycle? So you're looking for rewards, NOT 0% financing? (CCs are very risky if you're going to carry the balance IMO, even with 0% periods). Can you split the transaction up among several cards, so you can hit sign up bonuses?

[Jacob F]

Hi Bracken_Joy,

Thanks for the very prompt feedback, good points!

We would be able to immediately pay off the sum, but it would be very neat to combine the credit card benefit also with an introductory rate of 0% for a certain period of time on the cards.
I don't mind the temporary credit score hit for utilizing the cards above 30%, as we are not looking at adding any loans or mortgages.

0% Financing could be interesting if it is for a prolonged period of time (longer than normal credit card signup periods), but normally I don't like such financing too much because I always feel like they get you with something else... But I haven't entered into such arrangements before so this is only a feeling.
 
Transaction would likely be splittable but I haven't inquired that yet. I would be surprised if they didn't agree to it though.

[Bracken_Joy]

So I'm by no means an expert in CC churning type stuff (hopefully someone will pop in who is!), but from what I've seen it looks like the 0% periods are the "reward" on a lot of them. Otherwise the sign up bonus for meeting a minimum spend tends to either be airline miles or statement credit. So it depends if you want to do any travel too! I like nerdwallet for info and layout, here's their 2017 list: https://www.nerdwallet.com/blog/top-credit-cards/best-credit-card-offers/

Hopefully someone more knowledgeable jumps in. For example, I don't know if you should try to stagger taking the cards out if you have time before the procedure? Things like that. But I hope the little bit I gave is a start!

[boarder42]

personally i'd get multiple cards with 16k in spending you can meet the minimum spend requirements on many cards depending on what your needs are either points or money could help you out.

So what are your goals travel or cash?  really you'll likely end up with both.  You can make multiple payments with different cards.

[frugaliknowit]

Why are you NOT using the HSA?  Why are you proposing using AFTER TAX dollars to pay for medical expenses, when you can pay pre-tax?  The tax savings is far greater than any cc rewards.

If you are concerned about the balance in your HSA dwindling, just refill it as fast as you can.

[boarder42]

Why are you NOT using the HSA?  Why are you proposing using AFTER TAX dollars to pay for medical expenses, when you can pay pre-tax?  The tax savings is far greater than any cc rewards.

If you are concerned about the balance in your HSA dwindling, just refill it as fast as you can.

B/c if you already make enough to max out tax advantaged accounts and then save extra money in taxable on top of this it is more efficient to leave the money in the HSA to grow tax free.  You can keep your reciepts and withdraw money paid by a credit card at any point in the future.  This is how we do it as well.. I have a tracking of all reciepts and i will reimburse myself the money during our 5 year bridge for the roth ladder once we FIRE.  Rather than putting more money into our taxable accounts and paying capital gains taxes on it.

[frugaliknowit]

Why are you NOT using the HSA?  Why are you proposing using AFTER TAX dollars to pay for medical expenses, when you can pay pre-tax?  The tax savings is far greater than any cc rewards.

If you are concerned about the balance in your HSA dwindling, just refill it as fast as you can.

B/c if you already make enough to max out tax advantaged accounts and then save extra money in taxable on top of this it is more efficient to leave the money in the HSA to grow tax free.  You can keep your reciepts and withdraw money paid by a credit card at any point in the future.  This is how we do it as well.. I have a tracking of all reciepts and i will reimburse myself the money during our 5 year bridge for the roth ladder once we FIRE.  Rather than putting more money into our taxable accounts and paying capital gains taxes on it.

If I have $16K pre-tax money, why would I want to part with ($16K + (1.Tax Bracket)) NOW????  To earn 2% cashback?  Makes no sense to me unless I am in 0% tax bracket...  For the possible tax deferral in the future?

[boarder42]

Why are you NOT using the HSA?  Why are you proposing using AFTER TAX dollars to pay for medical expenses, when you can pay pre-tax?  The tax savings is far greater than any cc rewards.

If you are concerned about the balance in your HSA dwindling, just refill it as fast as you can.

B/c if you already make enough to max out tax advantaged accounts and then save extra money in taxable on top of this it is more efficient to leave the money in the HSA to grow tax free.  You can keep your reciepts and withdraw money paid by a credit card at any point in the future.  This is how we do it as well.. I have a tracking of all reciepts and i will reimburse myself the money during our 5 year bridge for the roth ladder once we FIRE.  Rather than putting more money into our taxable accounts and paying capital gains taxes on it.

If I have $16K pre-tax money, why would I want to part with ($16K + (1.Tax Bracket)) NOW????  To earn 2% cashback?  Makes no sense to me unless I am in 0% tax bracket...  For the possible tax deferral in the future?

i dont know how to explain this more clearly but the 16k has to come from somewhere and go somewhere. 

if OP has 16k in cash and 16k in their HSA - they should pay the medical bills with "cash" meaning pay with a credit card and then pay that card off with the cash .  The money in the HSA grows tax free forever.  and the 16k sitting in cash would then have to be invested in a taxable account which the interest earned would be taxed as capital gains.  Where as the money in the HSA the 16k that was left there grows tax free and OP can at any point in their life still pull out that 16k BUT all the interest on it is not subject to tax.

[Catbert]

If you need/want to drag out paying it out a bit, I think it's the Slate card (Chase?) which will give you 15 months at 0% interest and will no other fees. 

Personally I would select a couple or (even two each) of rewards can and meet minimum spends that way.  But only if you will payoff immediately.  Chase Sapphire Preferred would be a great start.

[RWD]

Why are you NOT using the HSA?

http://www.madfientist.com/ultimate-retirement-account/

[bacchi]

Will the provider(s) let you split the cost between several cards?

Apply for 2 (or more) credit cards the same day/hour, aka an app-o-rama. Your partner can do the same. Your vacation is now covered, courtesy of Mega Bank, Inc.

[Telecaster]

If I have $16K pre-tax money, why would I want to part with ($16K + (1.Tax Bracket)) NOW????  To earn 2% cashback?  Makes no sense to me unless I am in 0% tax bracket...  For the possible tax deferral in the future?

Your wallet doesn't know if that $16,000 is tax free or not.  All it knows is that it has $16,000.    But that $16,000 in an HSA has potential to grow tax free for as long as you like. 

But if you use the HSA for medical expenses now, you lose that tax free earning potential.    Back of the envelope says that $16,000 compounding at a modest 6% for 20 years will be over $50,000--tax free.  That is a lot of upside your are giving up by using the HSA now instead of later.  So from a tax efficiency standpoint, it is better to pay medical expenses out of other savings/income. 

[Jacob F]

Thanks everyone for chiming in, I will definitely try not to use the HSA, and look into multiple credit card offerings starting with the Chase.
Glad we could touch on the HSA topic more, although it is counterintuitive at first, it makes a lot of sense to keep the money in the account for as long as possible.