Finding Your Best Credit Cards for Home Improvement

Home improvement projects with a credit card

No matter the size of your home improvement project, you may need to borrow money to complete it.

One option is charging your upgrades and renovation expenses using credit cards. Some cards are better than others when it comes to charging lower interest, providing more valuable rewards, and other perks.

Take the time to learn if you are a worthy candidate for a home improvement credit card, their advantages and disadvantages, how to find the right card, and alternative financing to consider.

In this article (Skip to...)

• Good candidates for credit cards
• Home improvement credit card pros and cons
• Finding and applying for home improvement credit cards
• Using credit cards responsibly
• Recommended credit cards for home improvement
• Alternative financing options

Good candidates for home improvement credit cards

Virtually anyone looking to finance a home improvement project can be a good candidate for pursuing and using one or more credit cards.

“Credit can be a great way to finance projects like these because they often offer incentives such as cash back, points, and rewards that can help offset the cost of your project. Additionally, some credit cards have no annual fee, so you won’t have to pay extra every year just for having the card,” said Zach Larsen, CEO of Pineapple Money.

Still, not everyone is a worthy prospect for using plastic to pay for home upgrades.

“Consumers who pay off their credit cards in full every month by being savvy with spending and monitoring their budget will likely use these cards responsibly,” notes Andrea Woroch, a consumer finance expert.

Ask Levon Galstyan, a CPA and personal finance expert, and he’ll tell you that you should have good credit – with a credit score preferably of 720 or higher – a stable income, a clear plan (including estimated budget and timeline), and fiscal discipline if you want to apply for and use credit cards for any reason, including home improvement.

Pros and cons of using credit cards for home improvement

The pluses of credit cards are multifold. They provide a convenient way to pay for home improvement projects, as they are widely accepted and can be used to purchase online or in-store.

“Many cards offer a rewards program, as well, such as cash back or points, for every purchase made on the card,” says Galstyan. “Some credit cards offer low or even 0% interest rates for a limited introductory period. If you can pay off the balance before the introductory period ends, this can be a cost-effective way to finance your home improvement pursuits.”

In addition, your card may offer purchase protection for items you bought for your project. Your credit card issuer may be able to facilitate a return past the deadline and/or double the manufacturer warranty, for example.

On the downside, many credit cards charge among the highest rates in the industry for financing. It’s not uncommon for credit card APRs to exceed 17% to 26%.

“If you carry a balance on your card, the interest rates can be very high, resulting in additional costs and potentially making the project more expensive in the long run,” Galstyan continues. “What’s more, some cards charge annual fees, balance transfer fees, or cash advance fees, which can add to the cost of financing your project.”

Keep in mind it using credit cards can cause your credit score to drop if you carry a high balance or missed payments.

Furthermore, some rewards or discounts may not apply if you shop at a particular retailer. Your application for a credit card may be rejected if you don’t have good-to-excellent credit, too.

Worst of all, the convenience and wide accessibility of credit cards make it easy to overspend and snowball debt, particularly if you don’t have a clear repayment plan in place.

How to find and apply for credit cards for home improvement

Prior to shopping and applying for a credit card, follow best practices that can increase your odds of getting approved and benefiting from the best offers and terms.

First, determine your credit score, which will play a significant role in whether or not you are approved and the interest rate you’ll receive. You can check your credit score for free from your bank or various credit reporting agencies. If your score is lower than 720, work to improve it by paying your bills on time, not overcharging on any existing card you have, and not closing any other cards or lines of credit.

Next, research different credit cards carefully. Put cards that offer lower interest rates, better reward programs, and other perks higher on your list. You can shop around for credit cards and card offers online via a simple Google search.

“Check the fees and terms carefully, including hidden fees like balance transfer fees. Be sure to read the fine print and understand the costs associated with the credit card you are considering,” recommends Larsen.

When comparing credit cards, look for ones that offer rewards and incentives.

“Many cards offer cashback or points for every dollar spent on home improvement purchases. Additionally, some cards also offer additional bonuses or spending in certain categories – such as hardware stores or home improvement retailers,” Larsen suggests.

How to responsibly use credit cards for home improvement

It’s easy to get in over your head with credit card debt if you’re not careful. That’s why it’s crucial to devise a plan for responsible spending before you begin using the card. Larsen recommends these tips:

• Determine the amount you can afford. Make sure you have a clear idea of the total amount you need for your home improvement projects. This will help avoid overspending and ensure you can make payments on time.
• Pay your credit card bill punctually every month. Late payments can result in costly fees and damage your credit score. Set up automatic payments or reminders to ensure you make payments on time.
• Make more than the minimum payment. Try to avoid carrying a balance, which can incur steep interest charges.
• Use rewards wisely. Apply your cash back or card rewards toward your balance due or future home improvement purchases to take advantage of your benefits.
• Avoid using the card for non-home improvement purchases. Using the credit card for other transactions can increase your debt and make it harder to pay off your balance. Strive to use cash or a separate credit card for non-home improvement purchases.
• Keep track of your spending. Monitor your credit card statements to prevent exceeding your budget or missing payments.

Recommended credit cards for home improvement

If your goal is to pay for home improvements, numerous credit cards are worth exploring, including these highly rated cards for balance transfers.

“One of the most popular is the Home Depot Consumer Credit Card,” Larsen notes. “With this card, you can get 6-to-24 months of financing on purchases over $299 and receive exclusive offers throughout the year. They’ll also give you up to one year to make returns on purchases instead of only a three-month return window.”

Larsen also recommends examining the Lowe’s Advantage Card, which offers 5% off every purchase and special financing options for larger purchases, as well as 20% off (up to a $100 discount) when you open and use a new account.

Another one the experts like is the U.S. Bank Cash+ Visa Signature card. It enables you to select two of its 12 categories to claim 5% cashback on the first $2,000 in combined spending every quarter (1% cashback thereafter). These categories include furniture stores and department stores, where you can purchase home décor, appliances, and new furnishings. The card charges no annual fee and provides a $200 rewards bonus when you spend $1,000 in the first 120 days after opening the account. You’ll also get a 0% introductory APR on purchases and balance transfers over the initial 15 billing cycles.

Woroch is a fan of the Bank of America Customized Cash Rewards card. She says you get to choose from a variety of categories in which you will earn 3% cashback – one of which is for home improvements and furnishings.

“This category includes major home improvement stores as well as smaller home improvement service providers and businesses to cover all your project needs,” she says. “Another perk of this card is that there is no annual fee, and they have an intro offer of $200 cash back when you spend $1,000 in purchases within the first 90 days of opening the account. You’ll also benefit from an introductory 0% interest rate for 18 billing cycles to give you extra time to pay off your purchases without interest piling up.”

Another no-annual-fee card that gets high marks is the Wells Fargo Reflect Card, which offers an extremely generous 0% APR introductory period. In fact, that 0% applies to purchases or balance transfers up to 21 months from account opening.

If you’re looking for a more general-purpose credit card with rewards, “consider a cashback card like the Chase Freedom Unlimited card, which offers 1.5% cash back on all purchases and has no annual fee,” adds Larsen. “With a card like this, you don’t have to worry about shopping only in stores where you’ll earn rewards.”

Alternatively, ponder the no-annual-fee Citi Custom Cash card, which also promises 5% cashback (up to $500 every billing cycle, then 1% cashback thereafter) on your top spending category. For the home improvement category to apply, it has to be the category you spend the most money on in that billing cycle. You’ll further benefit from a 0% APR introductory period on new purchases and balance transfers over the first 15 months as well as 20,000 “thank you points,” rewarded after spending $1,500 within the first six months of opening your account, which can be converted to $200 in cash.

Alternative financing options

Plastic isn’t the only way to go when you looking to fund home improvements. Depending on your budget, intended repayment period, credit score and history, and other criteria, it’s worth exploring other financing choices, such as a:

• Home equity loan, a second mortgage that allows you to tap into your home’s accrued equity but which requires you to use your home as collateral.
• Home equity line of credit (HELOC), a line of credit secured by your property that turns your home’s value into cash. However, HELOCs typically have similar qualification requirements as a home equity loan.
• Cash-out refinance of your primary mortgage loan. The advantage here is that the fixed interest rate for a cash-out refi is often lower than for a home equity loan, but closing costs can be high.
• Reverse mortgage. Seniors over age 62 are eligible for a reverse mortgage, wherein a lender offers either a lump sum or a line of credit or annuity, depending on your preferences.
• Personal loan, which is often unsecured, meaning you aren’t required to put up any collateral like your home.

Next steps

Convinced that a credit card is your most viable financing vehicle?

Once you decide on the best card, apply online and prepare to wait for approval. The credit card issuer will review your credit history and other financial information to decide if you are creditworthy.

Some cards offer instant approval, while others may respond with a verdict within a few days. Once you get approved, the physical card will likely arrive in the mail within two weeks and you’ll be on your way to improving your home.