Using a credit card to finance a large purchase can be a smart move, as long as you pay it off in time. Not only can you avoid paying interest, but you can earn valuable travel rewards or cash back.
But when does it make sense to use a credit card to finance large-scale home improvements, like a bathroom renovation or a new appliance? Here’s our guide to when — and how — to go about it.
Find a card to maximize home improvement savings
Before you spend, find the card that best suits your spending habits. This will allow you to maximize the value of your home improvements.
For some, that will mean a cobranded store credit card associated with a particular retailer or brand. Others may want a general cash-back credit card if they plan to shop at multiple stores. Another option is a card offering an introductory 0% annual percentage rate, so you can pay off your purchase over several months without incurring interest.
The key is to weigh your options — considering where you shop, how much you’re spending and how you plan on paying off your purchase.
Have a payment strategy in mind
Once you’ve found the right card, how do you plan to pay off your purchase?
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Ideally, we could all pay off our full credit card balance within the first billing cycle. But there are ways to avoid paying interest if you need to make an urgent purchase.
As mentioned, several cards offer things like 0% introductory APR and deferred payment plans so that you can pay off a major purchase over time. Pairing the right card with a payment plan you can afford will ensure you aren’t compounding your losses by paying lots in interest or other fees over time.
Pay it off before the promotional period ends
It goes without saying that you should generally not buy anything on a credit card you couldn’t afford to buy with a debit card. If you are taking advantage of a 0% APR offer, plan to pay off the balance in full before the promotional period ends. Above all, avoid paying interest on any purchase, large or small.
Bottom line
As with other large purchases, using a credit card to fund home improvements can be useful if you’ve found the right card for your purchase and can pay off your balance before the high interest rate kicks in.
Whether you’re looking for a cobranded store card, a regular cash-back card or a card with an introductory low APR, there are plenty of options for your next big purchase.
