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If you decide to take on a home improvement project, the general consensus is to avoid credit card debt to do it. Average credit card interest rates are climbing—currently, over 16 percent—and could add considerable costs to your renovation budget.
That’s why most people choose lower-interest options like a home equity line of credit (HELOC) or a personal loan for these projects. But what if those products aren’t a good fit for your situation?
Because there are some exceptions to this rule, some people may choose to use credit cards to finance their home renovations. Although it can be a risky move, there are times when it makes sense—like when you can take advantage of an introductory 0 percent APR offer, generous welcome bonus, or even earn rewards on your spending. If you’re planning to go this route, here’s what you should know.
Using 0% APR offers for personal home renovations
A while back, I had the unfortunate experience of having a plumber rod out our bathroom tub only to end up rupturing the pipes and making it unusable. I was already saving up cash to renovate the space, but now it felt necessary to fast-track my plan. Even though I didn’t have all the cash for it, I decided to come up with a way to get it done. I settled on using a credit card.
This bathroom renovation project came to about $8,000. I paid about half in cash, and the rest I put on my Wells Fargo Platinum card*, which came with a 0 percent intro APR offer for 18 months (followed by 16.49 percent to 24.49 percent variable APR).
The remaining $4,000 on the card was split between the contractor’s labor costs and materials. It took about seven months to pay down that balance. I got my bathroom done, on credit, with no interest because I paid off the balance well before the end of the intro APR period.
Once I paid the balance off, I didn’t use the card for new purchases since the regular APR kicked in, but I did keep the account open. As a result, I’d get new balance transfer offers from time to time. Some were for 0 percent and others a little higher, but still well below the average APR, varying from six to 18 months.
Using 0% APR offers for business projects
At another time, I purchased an investment property to renovate and host guests on short-term rental platforms like Airbnb or VRBO. Once renovations were complete, I needed to add appliances and furnishings. At this point, I already had a couple of business credit cards and decided to add the Ink Business Unlimited® Credit Card to the mix.
This came in handy because it offered a $900 welcome bonus when I spent $6,000 within three months of opening the account, plus a 12-month 0 percent intro APR period (16.24 percent to 22.24 percent variable APR thereafter). Both of those features helped me save money on my purchases and interest expenses. Plus, I was able to rack up rewards points for all that spending.
In this case, I did have a small balance after the term for the intro APR offer expired. Fortunately, I was able to transfer it to my Wells Fargo Platinum, which had another balance transfer offer at that time.
Since then, I’ve used a combination of welcome bonuses, rewards credit cards and 0 percent APR offers to help finance personal and business-related real estate projects. If you’d like to use credit cards for home renovations or even a fledgling real estate business, here are some best practices that could help.
The best ways to use credit cards for home improvement
There are ideal and less-than-ideal ways to use your credit cards for home improvement purposes. These tips can help you avoid some of the pitfalls of using credit cards for large purchases like home renovations.
Choose the right card for the right situation
Depending on your project, you should choose a card that offers the features you need. A 0 percent APR offer could work if you need more time to pay down a large project over time.
Consider getting a rewards card with a “home improvement category” like the Citi Custom Cash℠ Card or the Bank of America® Customized Cash Rewards credit card. Then, cards with a welcome bonus with a large spending requirement can come in handy for the large purchases your renovation project might require.
Be mindful of fees
More contractors accept credit card payments for labor costs these days, but you’ve got to be conscious of fees they may charge for using a card. Some smaller outfits may charge an additional fee to use a credit card.
Also, if you decide to carry a balance on a card with a higher APR, you could end up paying quite a bit in interest fees. If prime rates continue to go up, carrying large balances could dramatically increase the cost of your home improvement project.
Know when to use your credit card
A great time to use a card is when you’ve got a large purchase that could help you meet a welcome bonus spending requirement. If you can get a 0 percent introductory APR, even better. Finally, if you can rack up rewards on one or more purchases related to your home renovations, you could stand to gain a lot when you use your credit card at the right time.
That said, using a credit card is not always the best option for big renovation projects. If you are nearing the limit of one or more credit cards, the increase in your credit utilization ratio could adversely impact your credit score.
As noted, using a card for labor may not be the best idea if extra fees are tacked on, but you can certainly use it to cover your materials. You can ask your contractor for a list of materials or accompany them to the store so you can charge materials to your credit card of choice. Another option is to give them an employee card, which is relatively easy to do with many if the best business credit cards.
Finally, you may be tempted to get a cash advance on your card to cover your home construction project, but that can be extremely expensive. Most card offerings won’t apply to your cash advance (i.e., a 0 percent intro APR, welcome bonus spending or rewards points), and the higher APR and attendant fees can quickly make your purchase much more costly. Additionally, there’s no grace period for a cash advance, and you’ll be charged interest right away.
Keep good records with your credit card
One benefit of using a credit card is that it can help you keep track of your spending. As a business owner, you’ll always need to keep records of your expenses and income. Even if you don’t have a business, tracking your home improvement expenses will come in handy for tax purposes or when you sell your home.
Fortunately, there are easy ways to connect your card spending to many accounting apps like QuickBooks or Wave Apps. These apps can help you organize and categorize your expenses in a much easier way.
Have a backup plan
If you depend on low or no interest APR offers to finance a home improvement project, make sure you can pay off the balance before the promotional APR period ends. If not, you could end up carrying a balance with a high interest rate.
If you don’t have enough cash to pay off your balance, try to have other options lined up, such as another balance transfer offer, personal loan or even a home equity loan or line of credit. Keep in mind that while these alternatives may save you money in terms of interest, they can become costly in their own right.
The best credit cards for home renovations
Here are some cards to consider when it’s time to renovate or makeover your spaces.
Citi Custom Cash: Best for automatic rewards
- Rewards rate: 5 percent cash back (on up to $500 each billing cycle, then 1 percent) on your top spending category each billing cycle
- Welcome offer: Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
- Annual fee: $0
- Purchase intro APR: 0 percent for 15 months
- Balance transfer intro APR: 0 percent for 15 months
- Regular APR: 17.74 percent to 27.74 percent variable
The Citi Custom Cash℠ Card is a great card for renovators because home improvement is one of its custom cash back categories. And you don’t have to track or activate any bonus categories to get up to 5 percent back on your spending.
If there is a particular category where you spend the most in a billing cycle, that’s where you’ll earn the most cash back. If you use this card for home renovations, be sure to put all of your purchases on the card within one billing cycle to be eligible for the 5 percent back on the home improvement category.
Ink Business Cash: Best for a generous welcome bonus
- Rewards rate: 5 percent cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year; 2 percent cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year; 1 percent back on all other purchases
- Welcome offer: $900 bonus cash back when you spend $6,000 on purchases in the first three months
- Annual fee: $0
- Purchase intro APR: 0 percent for 12 months
- Balance transfer intro APR: N/A
- Regular APR: 16.24 percent to 22.24 percent (variable)
If you’re venturing out into the world of real estate, having access to a line of credit can be a great help to your business. Before that step, a solid business credit card could work in the interim while helping you build business credit.
The Chase Ink Business Cash® Credit Card offers high rewards rates on selected categories, a top-notch welcome bonus and an intro APR on purchases of 0 percent for 12 months (followed by a variable APR of 16.24 percent to 22.24 percent)—all of which could support your spending on renovation, construction and contracting projects.
If you don’t mind paying an annual fee, this card’s sibling, the Ink Business Preferred® Credit Card, offers a similar scaled-up rewards system and welcome bonus. This is a great choice for real estate-related businesses ready for the next level in business credit.
Business Platinum Card from American Express: Best for more established businesses
- Rewards rate: Earn 5X Membership Rewards points on flights and prepaid hotels booked with AmexTravel.com, 2X points on prepaid rental cars booked through AmexTravel.com, 1.5X points per dollar spent (on up to $2,000,000 per calendar year) on both purchases of $5,000 or more and on select category purchases (electronics goods, retailers, software, and cloud service providers; construction materials and hardware supplies; shipping providers) and 1X points on all other purchases
- Welcome offer: Earn 120,000 Membership Rewards points after you spend $15,000 on eligible purchases within the first three months of card membership
- Annual fee: $695
- Purchase intro APR: 0 percent from the date of the account opening for 12 months (on eligible Pay Over Time purchases)
- Balance transfer intro APR: None
- Regular APR: 17.99 percent to 25.99 percent (variable Pay Over Time APR)
The first thing you might notice about the The Business Platinum Card® from American Express is the hefty annual fee. Although there’s a substantial carrying cost for this card, it offers a great slate of benefits, such as a welcome offer worth up to $1,620 through American Express Travel (with the 35 percent Airline Bonus redemption value.) Then, there are scores of other perks and benefits valued up to $3,508 per year, including annual statement credits and travel perks like airport lounge membership.
However, the biggest plus is that you can earn 1.5X on construction materials and hardware supplies on up to $2,000,000 in annual spend. We like it because it tends to reward the serious real estate investor with many construction projects throughout the year.
Upgrade Triple Cash Rewards Visa: Best for flexible payment options
- Rewards rate: 3 percent cash back on payments on home, auto and health purchases; 1 percent cash back on other purchases
- Welcome offer: N/A
- Annual fee: $0
- Regular APR: 14.99 percent to 29.99 percent
Upgrade Triple Cash Rewards Visa* offers cash back on broad categories that could include everything from tools, appliances and furniture, to car repairs, massages and marriage counseling. You could be approved for a credit limit as high as $25,000 and get the option to pay your balance in installments. This card might serve more like a personal loan, particularly if you’re on the lower end of the APR range, which could be ideal for larger home improvement projects.
Chase Freedom Flex: Best for cash back in multiple categories
- Rewards rate: 5 percent cash back on activated bonus category purchases each quarter (up to $1,500 in purchases, then 1 percent) and on Chase Ultimate Rewards travel purchases; 5 percent cash back on Lyft rides (through March 2025); 3 percent cash back on dining (including restaurants, takeout and eligible delivery services) and drugstore purchases and 1 percent cash back on all other purchases
- Welcome offer: $200 cash bonus after spending $500 within your first three months
- Annual fee: $0
- Purchase intro APR: 0 percent for 15 months
- Balance transfer intro APR: 0 percent for 15 months (Intro Balance Transfer Fee: $5 or 3 percent of the amount of each transfer, whichever is greater in the first 60 days)
- Regular APR: 17.99 percent to 26.74 percent variable
Although the Chase Freedom Flex℠ may not seem like an obvious choice for a home improvement card, it’s mentioned here because the rotating bonus rewards category often includes home improvement stores. When using this card, time your project when the bonus category includes home improvement purchases—often, but not always, the second quarter of each year.
Keep in mind that Chase announces its categories throughout the year, so this plan requires some flexibility and readiness to act. It also helps that there’s a welcome bonus and 0 percent intro APR offer for 15 months (followed by a variable APR of 17.99 percent to 26.74 percent). These features, coupled with the rewards, could help you save significantly on any home improvement project.
The bottom line
If you’re looking for credit cards that can help you accomplish your home improvement goals, starting with one that offers a 0 percent introductory APR can help. If you can earn a welcome bonus and ongoing rewards—even better. With the right credit card, you could preserve your cash, avoid interest and beautify your home or investment property on a very reasonable budget.
*The information about Wells Fargo Platinum card and Upgrade Triple Cash Rewards Visa® has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer. The Wells Fargo Platinum card is no longer available.