Often, if using your credit card means incurring a fee, it's better to pay another way. Why spend more than you need to? But in some cases, the fee might be outweighed by rewards.
That was the case for 29-year-old Keith Rosso, who recently used a credit card to buy a Tesla Model 3 with his wife Liz for a total of $58,857, including taxes and fees.
"If you use credit cards responsibly, making a large purchase to earn tons of points is an easy win," Rosso writes in Million Mile Secrets.
"The trick with my Tesla purchase is the card I used, [the] Chase Ink Business Preferred, earned 3X points for the purchase," Rosso tells CNBC Make It. Ink Business Preferred cardholders receive 3 points on every dollar spent in a range of categories designed to benefit small-businesses owners. Those categories include travel, shipping, advertising and internet, phone and cable services.
Purchasing the car through Plastiq qualified for that 3-point reward rate, although Rosso notes that there's no guarantee that will always be the case. The Ink Business Preferred may one day only reward Plastiq purchases with 1 point per dollar.
The 2.5 percent fee came out to about $1,470, while the purchase earned him nearly 180,000 Chase Ultimate Rewards points. At minimum that's $1,800 in value, but it could be worth even more when redeemed for travel. If Rosso transfers the points to the right hotel or airline rewards programs, he estimates that they'll be worth as much as $5,000.
In short, the rewards easily make up for Plastiq's fee.
If you plan to try this at home, do some math to ensure you'll get enough rewards to justify the fee, and do the research to make sure everything will go smoothly. For instance, Rosso warns that "certain cards code Plastiq purchases as a cash advance, so you do not want to use such cards when paying through Plastiq." Cash advances are usually accompanied by a fee of around 5 percent.
To buy something as expensive as a Tesla, you'll also need a high credit line, which can be a perk of a business card. Technically you need to run a business to qualify for a business card, but the definition of "business owner" these days can be broader than it may seem. "Do you sell items on Amazon, eBay or Craigslist? Do you teach music or sports? Ever act as a freelance writer or photographer? If you sell any goods or services, that could qualify you as a business owner," reports The Points Guy.
Rosso qualified for the Ink Business Preferred because of his eBay side hustle, and he notes that's what's special about the card is that it offers a high credit limit as well as the option to spend beyond that limit if necessary. His credit limit was around $37,000, so he exceeded it by about $23,000 to put the entire car payment on the card. But since he and Liz had the funds saved, they were able to pay the card off in full and they didn't have to deal with any extra fees or interest payments.
Now they're considering using the points to spend seven nights at a Hyatt in the Maldives or on round-trip business class tickets to Australia.
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