Should You Use a Credit Card for Home Renovations?

Should You Use a Credit Card for Home Renovations?


Tell Americans to stay home, and many of them will start projects to improve their house. That’s pretty much what happened when the COVID-19 pandemic began in 2020, and the home improvement boom is continuing in 2021. If you’re going to renovate your home, you’ll want to figure out if it makes sense to use your credit card.

Financing your home improvement project with a credit card

While you can use a credit card to finance your home renovation project, you’ll first have to consider the interest charges that you might incur. According to the Federal Reserve bank, the average credit card interest rate is about 15% APR, which can add up quickly if you take some time to pay off your charges.

Thankfully, there are many credit cards that offer new accounts 12, 15 and even 18 months of 0% APR financing on new purchases. So long as you pay off your charges before the promotional rate ends and the standard rate applies, you won’t incur any interest charges at all. Home improvement stores also tend to offer financing options when you use their own store charge cards.

Rewards for spending

By using a credit card to make home improvement purchases, you could save money through rewards and discounts. First, many retailer’s credit cards and store charge cards offer discounts to new applicants. For example, it’s not uncommon to receive a discount of 10% on new purchases when you’re approved for a new store charge card at major home improvement and appliance retailers. Some home improvement stores even offer a standard discount on all purchases made with their charge card.

Another way to save money on your home improvement project is by earning valuable rewards on your purchases. First, you can earn a substantial new account bonus when you’re approved for a new rewards card. Since the most generous welcome bonuses are often tied to large minimum spending requirements, charging a home improvement project can be a great way to earn these bonuses. The best bonuses can be worth hundreds of dollars of cash back, or even over $1,000 worth of travel rewards points or miles, so it can be wise to open up a new credit card and use it to pay for your home improvement project to earn one of these bonuses.

Finally, you’ll also want to consider the regular rewards for spending that you can earn from making big purchases with your credit card. For example, there are credit cards that offer 1.5% or even 2% cash back on all purchases. For a $10,000 project, that could mean $150 or $200 cash back, which is a great way to reduce the cost of your project. Unfortunately, there aren’t any major credit cards that offer year-round bonus points, miles or cash back at home improvement stores, the way many do for dining or travel purchases. There are, however, rewards cards with rotating cash back programs that offer up to 5% back at home improvement stores if you time your purchase just right.

Bottom line

From small projects to major renovations, tens of millions of Americans are looking to upgrade their homes, where they’ve been spending nearly all of their time for months on end. By using your credit card to pay for these projects, you can finance the project at no cost, earn rewards for your spending or both!