Home improvement projects can be pricier than you think. While the thriftiest way to finance your renovations is in cash, credit cards can offer a convenient alternative if you make your minimum payments and don’t run up high debt utilization.
Store and bank-issued cards offer lucrative rewards programs and 0% introductory APR periods that can greatly complement your home remodeling budget.
Save Money
Home improvement projects represent significant expenses; consumers should do everything possible to minimize the sting. This includes maximizing the number of ways to save money on purchases, earning rewards, and paying in cash.
As the market leader for home improvement products like Home Depot is a good destination for new and experienced homeowners alike. The chain’s retail stores and online shopping portals are packed with various tools, equipment, and supplies to help homeowners repair and refresh their homes. Unsurprisingly, the company offers a slew of discounts and coupons to help customers maximize their savings.
Some of the biggest home improvement retailers also offer co-branded credit cards with high-value rewards and low or no annual fees. Some of these cards also offer special financing for certain types of projects. While credit cards can be a useful tool for reducing the overall cost of many home improvement projects, they come with some risks and should only be used for some purchases.
For example, some credit card reward programs feature limits and caps on what kinds of purchases qualify for rewards. If a person plans to spend more than $10,000 on their home improvement project, consider a card with higher limits or a category that excludes home improvements. In addition, it’s important to know that most contractors who perform home improvements do not accept credit cards. As a result, a homeowner who wants to buy the supplies needed for their project on credit should negotiate with the contractor to see if they can pay for the labor portion of the project using a credit card.
Other homeowners prefer to use a credit card with a 0% introductory APR to finance their projects. If they have enough equity in their home, this can be an effective strategy to reduce the overall cost of a project. However, the interest rate after the introductory period expires can be high, so it’s important to consider all the options before deciding how to finance a project.
Save Time
Home improvement projects are costly, and the costs can add up quickly. That’s why it is wise to spend time planning your project before accumulating supplies. This way, you can make more informed purchasing decisions and reduce the likelihood of overspending.
When assembling your budget, itemize each cost, including labor or professional fees. This will help you stay on budget and prevent overspending, even if you encounter unexpected expenses during your project. It’s also helpful to consider your home’s utility costs and see if there are ways you can save money, like by switching to a lower-cost provider or by scheduling bill payments for times when electricity rates are lowest.
Another way to save is by shopping at discount stores or outlets. These types of retailers usually offer lower prices on items nearing the end of their product life cycle. For example, if you’re looking to replace your garage door or upgrade your plumbing fixtures, you may find some items close to new condition for less than half the retail price.
You can further save by combining high-ticket items in one transaction. For example, if you’re renovating your kitchen, consider buying appliances, cabinets, and countertops in one purchase.
Some people prefer to take on do-it-yourself projects to save money on professional installation costs. This is a great idea, but it’s important to plan and ensure you have all the necessary tools, parts, and equipment before you begin. This will prevent overspending and help ensure the project is completed promptly.
During the holiday season, many home improvement stores have a lot of sales. Black Friday and Cyber Monday are particularly good times to look for discounts, but some stores have year-round deals. Also, if you have a rewards credit card, watch for specific categories, including home improvement purchases. These cards can earn you cash back, points, or a combination of both on your home improvement supplies.
Boost Your Credit Score
One of the best things you can do for your credit score (other than paying your bills on time) is to maximize coupons and rewards-earning opportunities. You’ll be able to meet minimum spending requirements, qualify for elevated welcome bonuses, and earn more points. Using credit cards to make home improvement purchases can help you achieve those goals, especially if the card offers a 0% introductory APR period and lucrative rewards program.
There’s no doubt that making smart financial choices and maximizing rewards can improve your credit score, but even more important is to establish good money-management habits. Otherwise, you could wind up in a vicious cycle of debt that negatively impacts your credit report and score. To maintain a strong credit score, it’s important to avoid going over your credit limit and keep your debt utilization below 30%.
A good way to do this is by utilizing the 0% introductory APR periods on credit cards with generous rewards programs and shopping portals that offer high return rates for online shopping. Many home improvement retailers are featured in shopping portals, meaning you can rack up extra cash back or rewards points on top of the ones you’ll get from the credit card.
