Whether you need more space for your growing family, or you simply want a change of scenery, moving is an experience that most will have to prepare for at least once. Part of the preparation will involve moving costs — some of which may come by surprise.
You can put money aside for the transitional costs associated with setting up new utilities. But, what about new beds for the extra bedrooms, or updated appliances for your new dream kitchen?
Moving costs like these tend to sneak up on people — and they can add up fast.
The advantages of using credit cards for large in-home purchases
Avoiding long-term debt is possible when using credit cards for large in-home purchases like new flooring, appliances or furniture. Here’s why:
Improve your cash flow
With a credit card, you can stretch out the payments for everything your move requires for as long as you need. For example, charging $4,000 in moving expenses would only require you to pay around $267 for 15 months in a row. Depending on your situation, those monthly payments may be a lot easier to handle when your alternative is coming up with all the cash you need upfront.
Just remember, if you don’t choose the right credit card, you will owe interest on your balance each month — and that interest can add up fast.
You can secure 0% APR for a limited time
With credit cards that offer 0% APR for purchases for a limited time, you can get an interest-free loan — hopefully long enough to get your move underway.
With the HSBC Gold Mastercard® credit card, for example, you qualify for 0% APR on purchases and balance transfers for 18 months with no annual fee (a balance transfer fee does apply, 12.99% -20.99% variable APR thereafter). If you used this card to purchase furniture and other essentials for your big move, you would have more than a year to pay your balance off in full while avoiding interest payments altogether.
Earn rewards on your spending
An added benefit to spending with zero percent APR for a limited time is earning rewards on your spending. The Chase Freedom Unlimited® gives you 3 percent back on up to $20,000 spent during your first year — and all with no annual fee. You also get 15 months with zero percent APR on purchases and balance transfers, although a balance transfer fee applies.
If you had $5,000 in moving expenses and furniture costs, this card would net you $150 in cash back rewards your first year. When it comes time to cash in your points, you can redeem for statement credits, gift cards, travel or merchandise through the Chase Ultimate Rewards portal.
There are also cards that let you earn an initial signup bonus plus ongoing rewards. With the Blue Cash Everyday® Card from American Express, you’ll earn 3 percent back on up to $6,000 in spending at U.S. supermarkets each year, 2 percent back at U.S. gas stations and select U.S. department stores and 1 percent back on everything else you buy. You’ll also receive a $150 statement credit after you spend $1,000 on your card within three months.
You can redeem rewards earned with this card for gift cards or merchandise, or even for statement credits that effectively erase some of the moving expenses you put on your card.
What to watch out for when using credit cards for large in-home purchases
Leaning on credit to pay for the biggest expenses of your move can leave you ahead, but it can also be a costly gamble if you don’t have a plan. If you don’t pay your balance in full by the time your credit card’s zero percent introductory APR offer ends, your interest rate will reset to the much higher ongoing variable rate. While the average credit card interest rate is currently over 17 percent, your rate could be significantly higher than that.
If you select a zero percent APR card that also offers points or miles, be careful you’re not overspending just to rack up more rewards. While it may be a stellar deal, you won’t be helping yourself if you use rewards as an excuse to embark on a spending spree you will regret later.
You should only use a credit card for moving expenses if you have a set budget in mind and a plan to pay your balance in full before your low introductory APR offer ends. If you rack up a bunch of charges that prove difficult to pay off, you could wind up with long-term debt that makes the cost of your move seem like a pittance.