Whether or Not You Should Fund Your Home Renovation Project With Credit Cards?


The basic idea behind revamping a home for any homeowner is to bring new and trendy looks to their current house. However, whenever someone plans to remodel their home, finance is the biggest challenge they have to face. Not everybody is equipped with savings to fund their home renovation project. A lot of homeowners look for personal loans or loan against property to fund their project, but what if that is not an option? According to a new research, many homeowners are bypassing the traditional funding systems like PL or LAP and looking more towards credit cards for the funding.

Even though credit cards can be expensive way to finance your home renovation project, yet it is a popular choice for many homeowner and if you are looking towards funding your home renovation plans, here are few things to consider:-

Paying off your credit card balance before the promotional period

While the idea of going for a 0% APR can sound exciting as you aim at paying your balances before the grace period, it can go wrong. Most people want to make the best of the promotional offer and purchase things that they cannot afford. However, a small unexpected situation like an accident or illness can make your well-crafted plan go down the drain. As per the experts, most card owners often forget about the promotion period dates and fail to pay timely. As a result, they fall into huge credit card debts. Even with cash in hand, you should consider of taking more debt is a good option or not.

Making the best use of reward points

Home renovation projects require all kinds of creativity. For instance, if you have recreated a corner of your home by painting it with new age styles and furniture, by adding small elements to that corner, you can enhance the entire look. These small elements can be easily purchased with reward points you have earned on your credit card purchases.

Using store-specific cards

There are many banks today that have collaborated with home improvement stores to help consumers for home renovation. These store specific cards can be a good option for those looking for renovating their homes. Many stores offer deferred interest plan after a certain limit of purchase, while some stores offer flat percentage discounts on purchases. However, the big question here is which card makes more sense to you. Also, if you are unable to pay-off the balances before the deferred period ends, you would have to pay the interest accumulated throughout the period along with the principal amount.

Looking for other options

Undoubtedly, credit cards are an expensive option compared to personal loan or home equity. But, a loan is a loan, regardless of the form. Hence, many experts recommend funding the home renovation projects with the savings. It is understandable that you would not earn any rewards or cashbacks by paying your bills with cash. But, you also don’t have to worry about paying back timely and high interest charges.

Credit cards with 0% APR introductory offer

Many aspects of home renovation require pricey purchases. If you don’t have enough savings, it can become impossible to renovate your dream home. But if go for a credit cards that charges 0% interest rate till certain period of time, it can be a good option for putting your big expense items in multiple payments to avoid any budget shocks. Also, credit cards come with an advantage of reward points, financing big ticket items can earn you good amount of points and if you clear your balance before the APR period ends, you can further enjoy more perks.

Final word

Every expert in the financial industry recommends doing monthly savings to avoid any problems later. Personal stash is always a better option for home improvement plans. But, your home is like a well which can never be filled completely. There always be some or the other kinds of expenses that can eat your savings easily. Therefore, along with savings you should also have an emergency fund so that you can finance these emergent expenses and you don’t have to look towards spending on credit cards.