How to use 0% APR credit cards for home renovations

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When it comes to financing home renovations or other real estate projects, there’s a consensus that taking on credit card debt is not a good idea. The average credit card interest rates are on the high side—currently, over 16 percent—and could add considerable costs to your budget.

However, there are some exceptions to this advice and it is possible to use credit cards for rehabbing and renovation without ending up in a pile of debt. You need to use them intentionally, for example, making the best use of 0 percent introductory APR offers and using rewards cards. If you want to use your credit cards as a tool to support your home renovations or similar real estate projects, here’s what I did and some best practices that might help you.

How I started using 0% APR offers for my home renovation projects

I started using credit cards for home renovations, then eventually started investing in real estate and used them for that purpose, too. I’ll admit it was a little nerve-wracking to go against the grain and use credit cards for large purchases. Eventually, I understood how to mitigate the risk of using high-interest debt and reap the rewards of using credit cards for home improvement projects.

Using 0% APR offers for personal home renovations

About four years ago, I had the unfortunate experience of having a plumber come to rod out our tub only to end up rupturing the pipes and damaging the tub. This made the bathroom unusable. I was saving up cash to cover the renovation for the bathroom, but now it felt necessary to fast-track the renovation, even though I didn’t have all the cash for it.

The entire project came to about $8,000. I was able to pay 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). I put the remaining $4,000 needed to complete the project on that card, split between the contractor’s labor costs and materials. It took about seven months to pay down that balance. I got my bathroom done and paid no interest because I paid it off well before the end of the intro APR period.

Once I paid the balance off, I didn’t use it for new purchases since the regular APR kicked in, but I did keep the card open. As a result, I’d get new balance transfer offers from time to time. Some were for 0 percent and others up to 2 percent, varying from six to 18 months.

Using 0% APR offers for business projects

At one point, I purchased a property where I eventually began to host guests on short-term rental platforms like Airbnb. 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 $750 welcome bonus when I spent $7,500 within three months of opening the account, plus a 12-month 0 percent APR period (13.24 percent to 19.24 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.

I did have a small balance after 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 this time, 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 burgeoning real estate business, here are some best practices that could help.

The best ways to use credit cards for home improvement

There is a right and a wrong way 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. Ideally, the card will give you this rate for purchases and balance transfers so you can avoid balance transfer fees. If not, the balance transfer fee should at least be less than the interest you would have paid with another higher-interest option.

If you’ve got a card that offers rewards for home improvement categories, like the Visa Upgrade Triple Cash Rewards card, or has a welcome bonus with a large spending requirement, it could be a good time to use your card. Ideally, you’d be able to pay off the balance at the end of the billing cycle to avoid paying interest. You essentially negate your rewards and bonuses when you start paying interest on your home improvement-related purchases.

Be mindful of fees

More contractors accept credit card payments for labor costs these days, but you’ve got to be mindful of fees they may charge for using a card. Some smaller outfits will 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. With average credit card APRs over 16 percent, 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. 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, 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 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. But even if you don’t have a business, keeping records of your home improvement spending 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.

Wells Fargo Platinum Card: Best for 0% APR

  • Rewards rate: N/A
  • Welcome offer: N/A
  • Annual fee: $0
  • Purchase intro APR: 0 percent for 18 months from account opening
  • Balance transfer intro APR: 0 percent for 18 months on qualifying balance transfers
  • Regular APR: 16.49 percent to 24.49 percent variable APR

If you need to stretch out a purchase over time without paying interest, the Wells Fargo Platinum Card is a great option. Although there are no rewards, there’s also no annual fee. This card does come with some extra perks like cellphone insurance and free access to your FICO score.

Citi Custom Cash℠ Card: 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: 20,000 ThankYou Points—worth $200 in cash back—after spending $750 on purchases in the first three months
  • Annual fee: $0
  • Purchase intro APR: 0 percent for 15 months
  • Balance transfer intro APR: 0 percent for 15 months
  • Regular APR: 13.99 percent to 23.99 percent variable

The Citi Custom Cash 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® Credit Card: 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: $750 bonus cash back when you spend $7,500 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: 13.24 percent to 19.24 percent (variable)

If you’re venturing out into the world of real estate, having a good line of credit can make or break your business. Before that step, a solid business credit card could work in the interim. The Chase Ink Business Cash card offers high rewards rates on selected categories, a top-notch welcome bonus and an intro APR of 0 percent for 12 months (followed by a variable APR of 13.24 percent to 19.24 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 cards.

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: 8.99 percent to 29.99 percent

This card 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: Earn 5 percent cash back on grocery store purchases (not including Target or Walmart purchases) on up to $12,000 spent in the first year; 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 2022); 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: N/A
  • Regular APR: 14.99 percent to 23.74 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 APR offer for 15 months (followed by a variable APR of 14.99 percent to 23.74 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, you stand to save even more. With the right credit card, you could preserve your cash, avoid interest and beautify your home or investment property with a reasonable budget.

Written by
Aja McClanahan
Personal Finance Writer
Aja McClanahan is an author, blogger and speaker on personal finance and entrepreneurship. Aja is the author of "How a Mother Should Talk About Money with Her Daughter."
Edited by
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