|by Jason Steele|
A reader asks:
We own a time share that we owe $15,000 on we have the money in savings to pay it off. We have and excellent credit score close to 800.Would like to pay it off with a credit card then pay that credit card off right away and hopefully get some perks for doing that. The timeshare is owned though Marriott. Any thoughts?
This is an excellent question. It seems you have figured out the premise for reward card use; charge as many regular expenses as possible to your card, but pay the balance in full before interest accrues. People like ourselves have been using this formula for years in order to earn free travel, cash back, and all sorts of other types of rewards. Marriott heavily promotes the purchase of their vacation time share properties, but they do little to inform prospective buyers of the method of payment accepted. Nevertheless, a quick call to their billing center will give you the answer that you seek.
What Are The Possibilities?
It is likely that that they will not accept credit cards. That is unfortunate, but credit cards are rarely accepted for large payments such as this, including rent and mortgage payments. Simply put, the rewards you receive are paid for by the payment recipients in the form of credit card merchant fees. These fees can be 2-4% of the payment, an amount few companies are willing to part with for large payments that they are owed.
Another possibility is that they accept credit cards, but will charge some sort of processing fee. Typically, these fees are a percentage of the amount owed. Unfortunately, these fees usually equal or exceed the value of the credit card rewards you hope to earn, making the process a moot point in most cases. The only times these fees might make sense is if you are eligible or trying to qualify for a unique promotion. For example, many travel related cards offer status elite qualifying miles when customers reach a certain annual threshold. If this status is worth a lot to you, it might be worth paying a 2% fee or more. Other cards, like the AARP card from Chase, come with an promotional cash back rate of 5%, which is probably more than any processing fee.
If you are really lucky, they will accept your credit card without a fee. If this is the case, you will always be better off putting these charges on a rewards card, so long as you have the money on hand to pay off your balance in full and on time. If that is the case, try to make your payment the day after your statement closes. This will give you almost two months of free float before the payment is due.
If you have a question about credit cards or travel, always feel free to drop us a line here at Ask Mr Credit Card.