Smart Ways to Finance Home Improvements with a Credit Card


If you’re one of those dreaming of or planning some home improvement, you’re bound to have considered the biggest obstacle: how to finance the project? Most similar projects actually cost quite a lot and in many cases, the homeowners simply don’t have that much money saved and consequently have to resort to other methods of financing home improvement works. This is quite normal since the aim of the project is to significantly improve the living conditions for you and your family and hopefully turn your dreams into reality. Among the possible ways of financing home improvement works, one seems to be quite popular. You’re right, we’re talking about credit cards.

Most popular option

Among those who haven’t saved enough money, credit cards seem to be the most popular option, with home equity loans well behind them. This may sound like a surprise, given that credit cards can be an expensive way to borrow money. However, not everything is as it seems and here are some of the reasons why so many people opt to use their credit cards for home improvement projects.

Zero interest

If you have a credit card that charges 0% interest over a certain period, you’ll be able to spread the big expense of a home remodel over multiple payments. That will prevent your budget from being shocked with one huge instalment. Next, some of these cards come with reward points and other benefits, such as purchase protection. So, if you’re confident you’ll pay off the card’s balance before the zero-percent introductory APR offer expires, you’ll be able to gain all the perks without have to pay any interest or fees. However, you have to be aware that some contractors might charge an extra fee for payments by credit card. If that’s the case, reconsider your decision to use your credit card because the fee might outweigh the benefits you might gain by using the card.

Pay off before the promotional period ends

Though many cards offer an introductory 0% APR period, they come with interest rates around 15% after that period expires. That adds up quickly and when you consider the fact that the interest on a card is not tax-deductible, unlike mortgage interest, it doesn’t take a genius to realize that you may end up paying much more than necessary. That’s why you should be very realistic about your ability to pay off the whole or at least a major part of your debt before this period ends. Another useful tip is to consult a reliable free credit card comparison platform, which will allow you to have a great insight into all the credit cards available in your region and their offers.

Use rewards points for home-related items

If you’ve collected a certain number of rewards points by using your credit card, you might want to use them to buy smaller items for your home. That way, you’ll be actually get such items for free, because you would have to spend the same amount on home improvement anyway, so getting more for your money is a sound idea. 

Find out more about discounts and store-specific cards

There are many store-branded credit cards and some of them can be really useful. Take into consideration how much you’re planning to spend and how often you shot at the store. Also, consider whether you’ll pay off the balance monthly to avoid interest and what, if any, discounts the card gives you. It could be the case that a cash-back credit card that you can use at any store will give you more flexibility and a lower interest rate, as well as a higher credit limit.

Pay with savings to avoid interest

You may not pick up rewards points by paying your home improvement bill in full with cash savings. However, you’ll also never have to worry about interest at all. Ideally, you should create a home improvement savings goal and save monthly for it, so that you avoid the risk of paying interest on a credit card entirely. Also, it’s a good idea to budget for unexpected improvement costs, such as fixing a leaking roof. If you cover such costs with your credit card, you’ll build up additional credit card debt.

As you can see, there is no universal advice regarding financing a home improvement project. It all depends on your financial situation, your income and the expected expenditure. What you have to do is simply take all options into account and find the one that works best. A credit card can be of great help, but only if you use it in the right way.

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