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More Plan to Use Savings Than Credit for Big Purchases
21 May
When it comes to laying out a big chunk of change, most people plan to use their savings instead of their credit cards. That’s according to a study by Harris Poll that was conducted on behalf of SunTrust Banks, Inc.

Seventy-three percent of consumers said they would tap into their savings when paying for expensive things like weddings, vacations, or other large purchases. Twenty-one percent said they would use their credit cards and 12% were planning to take out a bank loan.

Of survey respondents who said they were saving their money for some type of big life event or major purchase, 30% said they put funds into a separate account to keep savings compartmentalized. Many banks offer savings accounts that are tied to a customer’s checking accounts, making it convenient to transfer money between accounts. Multiple savings accounts can be set up and assigned different names to represent different savings goals.

When asked whether they felt “being in control of their finances” was crucial to full enjoyment of life’s biggest moments, 61% strongly agreed that it was. The most-named big-ticket events people had planned for the coming year were international vacations, weddings, weekend getaways and the purchase of a new car.

The poll was conducted online between March 13 and 17, 2014 and comprised answers from 3,035 respondents ages 18 and older.

Credit cards, loans still a good option

People who prefer to leave their savings safely tucked away could consider a no-interest credit card for some of those large investments and purchases. Many credit cards have an introductory period where no interest is charged for the first six months to nearly two years.

Using credit cards to pay for big purchases can also be an easy way to collect credit card rewards, which might be in the form of cash back, free plane tickets, hotel stays or gift cards. Many cards offer 5% cash back in select categories, including department stores, home improvement stores, and online. When planning a trip, a wedding, a home renovation or a large purchase, it’s wise to first see what credit card rewards are offered in the categories customers will be spending money in, before deciding how to pay for the purchases.

Using credit cards instead of cash from a savings account is sometimes the smarter financial move. The 73% of survey respondents who shun credit cards in this study could be missing out.

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