Want to buy expensive product online. Credit line on credit cards not big enough. How do “Preferred Account” programs work?
"First and foremost - make sure where you are purchasing the product is a reputable organization.  Secondly (coming from a biased computer geek) - be aware that Apple is a content trap.  Now on to my answer to your question... How do ""Preferred Account"" programs work? They're ""Preferred"" because they tend to bring in more money to the lender.  It may say No payments for 6 months but the fine print may have you being charged interest during those 6 months, meaning your new shiny computer will be costing more than the sticker price.  The good side is that you don't have to send in any actual payments for 6 months, but be aware that you'll probably be paying more than advertised. What are the different ways I can do it? Your listed options 1 & 2 are both good ways to pay for your new computer.  Yes, option 1 will charge you sales tax, but are you sure paying online excludes sales tax?  Some states mandate it.   Option 2 is a viable option too - probably your best option. 1st - there is possibly no sales tax with purchases made online, although there may be a delivery charge.   2nd - you're not committing to an additional monthly bill, you are essentially paying with cash, just directly from your bank account.  No interest charge! 3rd - that little Visa logo is your friend.  Purchases made through Visa & MasterCard (whether it's a credit or debit card)  normally have an auto-extended warranty feature (you may want to verify with Visa before taking my word on it).  Typically they double any manufacture's warranty.   Lastly - you can always set up a PayPal account and link it to your bank account.  Assuming the site you plan on purchasing the computer from accepts PayPal." "The preferred accounts are designed to hope you do one of several things: Pay one day late.  Then charge you all the deferred interest. Many people think If they put $X a month aside, then pay just before the 6 months, 12 moths or no-payment before 2014 period ends then I will be able to afford the computer, carpet, or furniture. The interest rate they will charge you if you are late will be buried in the fine print. But expect it to be very high. Pay on time, but now that you have a card with their logo on it.  So now you feel that you should buy the accessories from them. They hope that you become a long time customer. They want to make money on your next computer also. Their ""Bill Me Later"" option on that site as essentially the same as the preferred account. In the end you will have another line of credit. They will do a credit check. The impact, both positive and negative, on your credit picture is discussed in other questions.  Because two of the three options you mentioned in your question (cash, debit card) imply that you have enough cash to buy the computer today, there is no reason to get another credit card to finance the purchase. The delayed payment with the preferred account, will save you about 10 dollars (2000 * 1% interest * 0.5 years).  The choice of store might save you more money, though with Apple there are fewer places to get legitimate discounts. Here are your options: How to get the limit increased: You can ask for a temporary increase in the credit limit, or you can ask for a permanent one. Some credit cards can do this online, others require you to talk to them. If they are going to agree to this, it can be done in a few minutes. Some individuals on this site have even been able to send the check to the credit card company before completing the purchase, thus ""increasing"" their credit limit. YMMV. I have no idea if it works.  A good reason to use the existing credit card, instead of the debit card is if the credit card is a rewards card. The extra money or points can be very nice. Just make sure you pay it back before the bill is due. In fact you can send the money to the credit card company the same day the computer arrives in the mail.  Having the transaction on the credit card can also get you purchase protection, and some cards automatically extend the warranty."
"Under the assumption you're not looking for a particular credit union/bank (since that'll make this question off topic), you can apply for a secure credit card. That's where you essentially put up a sum of money as collateral. That would be the safe way for someone with ""little or no credit history"" and wants to build credit. Any big bank (Wells Fargo, Chase, etc.) should be able to do that for you. You can also do that online provided you have the means to transfer money into the account." Hi,   This is treated as a electronic balance transfer. There may be a fee for performing this. Cash advance interest will apply on the EBT. You may get a teaser rate for a limited amount of time. After it expires, the normal cash advance interest rate for the credit card will kick in.   Check your credit card statement. Somewhere, you'll see a section listing the interest rates. One for retail purchases, one for cash transactions.   Do not do this. If you need to borrow money to pay off a large debt, do one of the following:  1) Switch to the lowest interest rate card your bank offers  2) Apply for a credit card with another bank that is offering a great teaser rate, transfer the balance, cut your living expenses and send every penny to paying off the balance before the teaser rate expires  3) If you cannot get access new credit or switch credit cards, seek advice from a professional credit counsellor on your options and the best one to choose  Sorry to ramble. I've seen far too many people fall into the debt trap. You don't want to go there.   Source: I work for a bank which offers credit card products. "The weird thing is that if you use the credit impact simulators with the credit monitoring services, they show that the impact of paying your credit cards off completely is more negative than carrying a small balance, which doesn't make a great deal of sense, one would think.  From what I can gather, the rationale is that carrying a small balance shows you making payments over time, as opposed to having a zero balance.  This doesn't quite compute with me, but I don't truly understand the inner workings of the scoring models.  To confirm this, I used simulators with both TransUnion and Experian, and both showed this.  I know that it's easy to find people on both sides of this argument, so I can't say which is the best option (certainly whichever side someone falls on is the one they'll argue is the right one! chuckle). In all fairness, your best tool is time.  The effects of your prior bad decisions will lessen over time as they move further away in your history and then disappear altogether.  Obtaining a credit card just because you think you need one is not a compelling argument, by any means.  If you can't rationalize reasons why you need it then maybe you should question the wisdom of such a decision.  If you don't have a particular need for better credit right now, why be in a hurry to take on debt? Whatever the formulas are for calculating credit scores, the specific details are a pretty closely-guarded secret (they're proprietary for starters, plus it theoretically prevents people from ""gaming the system"" for a better score), but if you do enough research online, you can get a pretty good sense of how they work in general. Whatever you do with your credit should be in line with your overall financial goals.  If you want to remain debt-free (at least for now) then having a credit card you can't otherwise justify a need for just introduces temptations which could prove tough to resist (""wants"" quickly turn into ""needs"" when you can put it on a card you pay later), then you're right back in the same place you were earlier in your life. Instead of trying to figure out the ""best strategy"" for a credit card, first ask yourself how necessary it is to you right now in light of your financial objectives, then go from there. I hope this helps. Good luck!" A lender will look at three things when giving a loan: Income. Do you make enough money each month to afford the payments. They will subtract from your income any other loans, credit card debt, student loan debt, mortgage. They will also figure in your housing costs. Your Collateral. For a mortgage the collateral is the house, for a car loan it is the car. They will only give you a loan to a specific percentage of the value of the collateral. Your money in the bank isn't collateral, but it can serve as a down payment on the loan.  Your Credit score. This is a measure of how well you handle credit. The longer the history the better. Using credit wisely is better than not using the credit you have.  If you don't have a credit card, get one. Start with your current bank. You have a history with them. If they won't help you join a credit union. Another source of car loans is the auto dealer. Though their rates can be high. Make sure that the purchase price doesn't require a monthly payment too high for your income. Good rules of thumb for monthly payments are 25% for housing and 10% for all other loans combined. Even a person with perfect credit can't get a loan for more than the bank thinks they can afford. Note: Don't drain all your savings, you will need it to pay for the unexpected expenses in life. You might think you have enough cash to pay off the student loan or to make a big down payment, but you don't want to stretch yourself too thin. some of that article is misleading, some of it is just plain wrong. Very wrong... like you end up drawing an incorrect conclusion type wrong.  Corporate transaction accounts, whose balances are up recently due to TAG (expires 12/31), are subject to reserve requirements.  When you purchase something with a credit card, the bank's asset of your credit increases and the bank's asset of cash decreases (it goes wherever you purchased).  There is no change to your deposit account and no change to reserves.  The incoming bank's cash account and liability account associated with that business transaction account increase, and it is trivial to transfer the % of cash necessary to reach minimum reserve requirements to the Fed.  Secondly, anyone with a smidgen of accounting can tell that his balance sheet won't balance. "The bottom line is that you are kind of a terrible customer for them.   Granted you are far better than one that does not pay his bills, but you are (probably) in the tier right above that. Rewards cards are used to lure the unorganized into out of control interest rates and late payments.  These people are Capital One's, and others, best customers.  They have traded hundreds of dollars in interest payments for a couple of dollars in rewards.  The CC company says:  ""YUMMY""! You, on the other hand, cut into their ""meager"" profits from fees collected from your transactions.  Why should they help you make more money?  Why should they further cut into your profits? Response to comment: Given your comment I think the bottom line is a matter of perspective.  You seem like a logical, altruistic type person who probably seeks a win-win situation in business dealings.  This differs from CC companies they operate to seek one thing:  enslavement. BTW the ""terrible customer"" remark should be taken as a compliment.   After you get past the marketing lies you begin to see what reward programs and zero percent financing is all about.  How do most people end up with 21%+ interest rates?  They started with a zero percent balance loan, and was late for a payment. Reward cards work a bit differently.  Studies show that people tend to spend about 17% more when they use a reward card.  I've caught myself ordering an extra appetizer or beer and have subsequently stopped using a reward card for things I can make a decision at the time of purchase.  For people with tight budgets this leads to debt. My ""meager"" profits paragraph makes sense when you understand the onerous nature of CC companies.  They are not interested in earning 2% on purchases (charge 3% and give back 1%) for basically free money.  You rightly see this as what should be a win-win for all parties involved.  Thus the meager in quotation marks.  CC companies are willing to give back 1% and charge 3% if you then pay 15% or more on your balance. Some may disagree with me on the extracting nature of CC companies, but they are wrong.  I like him as an actor, but I don't believe Samuel Jackson's lines." Overpaying a credit card to create a large positive balance may cause a bank to red flag your account.  This is a technique used in fraud for check kiting (write or deposit a fraudulent check to overpay your credit card, then demand a refund on the balance overpaid before the check bounces.) Every bank is different: Talk to your bank first before you try this.  For a small balance ($5-20) overpayment isn't a big deal, it happens regularly... just spend down the balance.  Past that, you might be harming your credit record or risk closing the account if the bank disagrees with how you are using an overpaid balance for a larger purchase, or you risk unwanted law enforcement attention aimed at your finances. If you are trying to do this to build your creditworthiness, a secured card is better for this purpose.  Disagree with your credit limit? Deposit more in the holding account. Three big ones that are common in almost all banks (though, individually, they may have other criteria): Other criteria I've seen (while working in the banking industry - varying by bank): the average balance you keep on deposit accounts (checking/savings/CDs/etc), number of overdraft fees in the past 12 months (one bank I worked for wouldn't approve a credit card if a customer had more than 5 overdrafts in the past year), the length of time a customer had been with the bank. Note that a credit card only company, like AmEx, may have different criteria in that they don't offer all the other type of accounts that other other banks do.