Choosing a Card

Do you plan ahead?

You're planning to redecorate, and you spot exactly the furniture you want on sale for hundreds of dollars less than you thought you'd have to pay. You've been having a good year, and you'll be getting your annual performance bonus in a few months. Your plan: charge the furniture to your credit card, pay what you can afford each month until bonus time, then pay off the entire amount.

It's a good plan if: (1) you're sure the bonus will come; (2) you limit your spending to the amount of the bonus (don't treat it like an endless supply of money); (3) you've found a card with a credit limit high enough to accommodate the purchase and with a reasonable interest rate over the period of time you'll need to pay off the balance.

Using a card offering a low introductory rate can be one choice for financing large purchases over a short time if you are certain you will pay off the balance and are comfortable with the terms. Opening a credit account with the furniture store is another option, but credit cards issued by financial institutions usually have lower rates than store cards.