Home remodeling is big business and shows no signs of slowing down anytime soon. Whether you prefer to DIY or outsource all of your projects, one simple fact is that home renovations cost money. In fact, a recent survey by Angi found that Americans will spend an average of $13,667 on 11.1 home projects in 2023. Having cash on hand to pay for these projects isn’t always possible, so homeowners often turn to financing options to ease their budget.
One option homeowners can consider is using a credit card that offers a promotional period of 0 percent APR on a purchase. If you budget responsibly and pay off the amount borrowed before the promotional period ends, you may be able to use the credit card as an interest-free loan.
Tips for Using a 0% APR Credit Card for Home Improvement
Using a 0 percent APR credit card and paying off your balance in full before the promotional period ends gives you the option to spread your payments out over a longer period while avoiding high interest charges. However, using these cards for renovations comes with risks, such as increased credit card usage and time-based payment obligations within your budget.
Here’s how to avoid common pitfalls when using a credit card for big purchases like home improvements or projects.
Maximize your home improvement return
A card with an interest-free period can help you stretch out your renovation costs and avoid paying interest, but if the card also earns rewards, it’s even better. The right 0 percent APR card can also help you make the most of cash-back rewards and points, and earn you a big welcome bonus offer. If you want a card that offers both attractive rewards and strong APR benefits, follow these steps.
- Look for rewards cards that have a home improvement rewards category. Both the Citi Custom Cash® Card and the Bank of America® Customized Cash Rewards Credit Card offer great rewards rates on home improvements.
- Look for cards that offer big welcome bonuses. If a card offers an attractive sign-up bonus, it should also be able to cover the large spending requirements for materials needed for your remodeling project. The best sign-up bonuses are cards that earn points or miles rather than cash-back cards, but such cards usually don’t come with a strong 0 percent APR offer (if they do). If you decide to go with a card with a large sign-up bonus and no APR offer, make sure you can pay it off in full by the bill’s due date.
- Consider whether you want to use points or cash back. You can redeem your rewards as a statement credit or direct deposit, putting money back in your pocket to directly offset the costs of your projects. You can also redeem your rewards for home improvement gift cards to use towards the purchase of supplies. However, if you have a points-earning card, your points will generally be worth less when you redeem them as gift cards or statement credits. However, you’ll likely get more cash back than you would with a cash-back card. If you want to get the most out of your points, you can use the points you earn to pay for future travel plans.
Ryan Flanigan, a credit card expert and writer at Bankrate, puts the most emphasis on welcome bonuses and introductory APR offers when it comes to maximizing your home improvement rewards.
My house is getting to an age where a lot of things need to be repaired or replaced. Whenever I have a big expense, I look for a new credit card with a sign-up bonus and a first APR offer on purchases. This gives me the flexibility and time I need to pay for repairs and gives me a nice kickback in points or cash back. I prefer this approach over using a card with a category bonus for home improvements because it usually gives me a better return this way, even when you consider fees that contractors may charge for using the card.
— Lighter, credit card
Be strategic when using your credit card
The best time to use your credit card is when you make a big purchase that will help you meet the spending requirements for your welcome bonus, especially if you can qualify for a 0 percent introductory APR. Finally, if you can accumulate points on one or more purchases related to your home improvements, using your credit card at the right time can provide you with great benefits.
But to make the most of a 0 percent APR offer, one card alone isn’t enough. One card strategy to consider is pairing a credit card with high rewards with a balance transfer card. With this strategy, you can pay for your renovation with a card that doesn’t offer a high introductory APR but has lots of rewards, and then transfer the balance from that card to the card with the rewards.
Brooklyn Lowry, credit card expert and senior editor at Bankrate, used this strategy to pay for her kitchen remodel. Here’s how it worked:
My husband and I are DIY-ers who bought a home built in the 1930s that needed to be updated to be comfortable for our modern family. One of the biggest projects was to completely redo the kitchen, down to the columns. So rather than paying for every big purchase out of our project savings, we opened a balance transfer credit card. We paid for everything with our rewards card, earned cash back on those purchases, and then transferred about $12,000 to the balance transfer card. We knew we’d be able to pay it off before the introductory period was up, but this way we could have some savings left over in case any unexpected expenses came up during the renovation.
— Senior Credit Card Editor
Beware of credit card fees
There may be situations where the rates are so high that you can’t justify using a credit card for your renovation. More and more contractors are accepting credit cards for labor payments, but you should be aware that there may be a fee for using the card. If there is a fee, you can ask the contractor for a list of materials or accompany you to the store so that the cost of materials can be charged directly to the card of your choice.
While you may be tempted to take out a cash advance on your card to cover your home construction project, think carefully about the high interest rates and fees that come with it. Most card perks (e.g., introductory APR, welcome bonus, rewards, etc.) do not apply to cash advances. Interest on a cash advance is paid immediately at a high APR and there is no grace period. High APRs and cash advance fees can make your purchase prohibitively expensive.
It’s also important to make sure you pay your credit card bills on time: Not only can you incur costly late fees, but late or missed payments can also result in penalty APRs and the loss of any 0 percent promotional periods, making a home improvement credit card a pricey option if you have to pay the highest APR.
Have a backup plan
If you take advantage of a low or no interest APR offer to finance your home improvement project, make sure you can pay off the balance before the promotional APR period ends, or you’ll be saddled with a high-interest balance.
If you don’t have enough cash to pay off the remaining balance, consider other ways to pay for your home improvements, such as a personal loan or mortgage, but be sure to read the fine print so you understand all the fees you’ll incur.
4 Best Credit Cards for Home Improvements Plus 1 Alternative
Some of the best cards for home improvement offer a 0 percent APR promotional period that can help you save on interest for 15 months or more. Here are our four favorites and one alternative.
Conclusion
If you’re looking for a home improvement credit card to help you reach your home improvement goals, start with one that offers a 0 percent introductory APR. If you can earn a welcome bonus and ongoing rewards, even better. With one of the best 0 percent introductory APR credit cards today, you can conserve cash, avoid interest, and beautify your home or investment property on a reasonable budget. And if you can’t find the credit card you want with a long enough introductory APR offer, try pairing a high-value rewards credit card with a top balance transfer card instead.
Whichever strategy you choose, make sure you’ll be able to pay off the balance before the end of the introductory period to avoid paying interest on the balance.
*Information about the Upgrade Triple Cash Rewards Visa® has been collected independently by Bankrate. Card details have not been verified or endorsed by the card issuer. The Bank of America content in this post was last updated on August 16, 2024.
