Key takeaways
- Using a credit card’s introductory APR promotional period to finance home renovation costs can help you save money.
- If planned correctly, your card’s intro period can become an interest-free loan for supplies and services.
- Some credit cards are better than others for financing home renovations, including those with access to lucrative rewards.
Home renovations are a big business, and there’s no sign it’s slowing down soon. Whether you prefer to DIY or hire every project out, the simple fact is that home renovations cost money. In fact, Americans spent an average of $13,667 across 11.1 home projects in 2023, according to recent research from Angi. Having the cash on-hand to pay for these projects isn’t always possible, which is why homeowners often turn to financing options so it’s easier on the budget.
One option a homeowner might consider is using a credit card with a generous 0 percent introductory APR promotional period for purchases. By budgeting responsibly and paying off what you borrow before the promo period ends, you just might be able to use your credit card as an interest-free loan.
Tips for using a 0% APR credit card for renovations
Using a 0 percent APR credit card and paying the balance in full before the promotional period ends can give you the option of stretching out payments over time, while avoiding costly interest charges. But using these cards for renovations comes with risks that include increased credit card use and a date-driven payment obligation in your budget.
Here’s how to avoid some common pitfalls of using credit cards for large purchases like home renovations and home projects:
Maximize rewards for home improvement spending
A card with a no-interest intro period can help you extend out your renovation payments and possibly avoid interest charges, but if that card earns rewards, it can do so much more. The right 0 percent APR card can also allow you to maximize your cash back rewards or points and earn large welcome bonus offers. Here’s what to do if you want a card that provides both lucrative rewards and a strong intro APR offer:
- Look for a rewards card with a home improvement rewards category. The Citi Custom Cash® Card and the Bank of America® Customized Cash Rewards credit card both offer boosted rewards rates for home improvements.
- Look for a card with a large welcome bonus. If a card offers a lucrative sign-up bonus, you should be able to satisfy even a large spending requirement on supplies your renovation project requires. The best sign-up bonuses will be for points- and miles-earning cards as opposed to cash back cards, but those kinds of cards don’t typically come with strong 0 percent APR offers — if any. If you decide to use a card with a large welcome bonus without an intro APR offer, just make sure you’re able to pay it off in full when your bill is due.
- Weigh your options between redeeming for points or cash back. You can redeem your rewards as statement credits or direct deposits, putting money back in your pocket to directly offset the costs of your project. You might also have the option to redeem rewards for gift cards to home improvement stores, which you can use on supplies.
If you have a points-earning card, redeeming points as gift cards or statement credits may result in a loss of value, but you can still earn more cash back compared to a cash back card. To maximize the value of your points, consider using them to offset future travel expenses instead.
Credit cards expert Ryan Flanigan prioritizes welcome bonuses and introductory APR offers to maximize rewards for home renovations. He finds this approach more beneficial than using a card with a category bonus for home improvement.
Strategically using credit cards for large purchases or to meet welcome bonus spending requirements can be advantageous. Consider pairing a high-value rewards card with a balance transfer card to optimize benefits. Brooklyn Lowery used this strategy to pay for her kitchen renovation, earning cash back on purchases and transferring the balance to a card with a 0 percent introductory APR.
Keep in mind that high credit card utilization during home renovations could temporarily lower your credit score. However, your score should recover once your spending returns to normal levels.
Be cautious of credit card fees when using your card for renovations, as these costs could outweigh the benefits. Some contractors may charge fees for credit card payments, so it’s important to weigh the pros and cons before using your card for large expenses.