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What are the different ways I can do it?

  1. Take cash from bank to store, pay state sales tax
  2. Debit card from bank that says Visa on it
  3. Find another way to finance it

Because none of my credit cards have a high enough credit limit to have any chance of the purchase going through.

The product is an Apple computer... MacMall is selling the model I want. They have a MacMall Preferred Account: "No payments for 6 Months on purchases over $250!"

How do these things work? I see these "financing options" on reseller websites all the time but I never understood how they worked.

If I make my purchase through this program, is it like signing up for another credit card that I have to pay from the bank? How is it similar to/different from Bill Me Later?

I'm gonna take a guess now that it's probably best for me to just to try to order using my bank's Visa debit card.

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Can you move money from your debit to your credit account? Depending on where you have your CC account, putting the money on the CC beforehand can circumvent the credit limit because technically you're not actually using credit. If you can't afford to pay the computer in one go, please strongly reconsider your purchase, as credit debt is among the worst kind of debts. –  Lagerbaer Dec 11 '12 at 4:58
    
Well my CC company certainly doesn't value me as much as my employer does so I can afford 10 such computers but no line of credit in my name with which to obtain even one. –  Steven Lu Dec 11 '12 at 6:00

2 Answers 2

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.

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I'll ignore the 'Apple is a content trap' and +1 for your #3 above. For high tech items, that extra year coverage can be worth 10% or so of purchase price. Not too shabby. –  JoeTaxpayer Dec 9 '12 at 4:22
    
TIL about CC's upgrading warranties. Hard to believe really. Visa or even AMEX probably are not gonna let me complain to them about dead pixels, though. –  Steven Lu Dec 11 '12 at 6:06

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:

  • Buy local: Cash or debit. Will have sales tax.
  • Buy online: debit or credit or PayPal linked to your bank account. Watch out for sales tax and delivery charges. They must charge sales tax if they have a store in your state.

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.

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Yeah, I want to use a credit card because of the rewards. Would attempting to increase the limit potentially reflect badly on my credit history somehow? I can for example order the item with a family member's credit card but the large chunk of spending would not then work toward improving my own credit history. It's not so much I'm worried about the (likely insignificant) impact of just this one purchase, but I'd like to better understand how this particular meatspace system works. –  Steven Lu Dec 9 '12 at 2:58
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If the rejection does appear in your history it will quickly fade away. This would be a credit pull by a card you already have. It is also possible that your use of the card has already qualified you for the increase, but they haven't gotten around to automatically raising it. Back in 2008-2009 many consumers saw their credit limits decrease as the banks tried to limit their potential exposure if everybody tried to maximize their use of their credit. –  mhoran_psprep Dec 9 '12 at 3:13

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