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For over a year since moving into her new home, consumer savings expert Andrea Woroch had her eye on what she thought was the perfect six-light chandelier for her entryway. The metal and oak light fixture also came with a big price tag: $599.
So she waited until it went on sale for $200 off and then made the purchase with the cash rewards she had accrued on her . “Even though I have enough cash in my savings account to cover this cost, I considered it an unnecessary purchase so only justified buying it if I got it for free with my rewards,” she says.
— which is now upon us — also tends to be prime home renovation season, for either the seller or the buyer. The strategic use of credit cards can help you offset the costs of improving your abode.
Americans tend to spend a lot on their homes: found that 85% of homeowners say their home is their biggest investment. While 52% said they were able to easily pay for their recent home improvement projects, 20% said they had to make sacrifices in other areas, and 13% took on debt for the projects.
That’s where credit card rewards can help. By using credit cards for everyday spending, homeowners can rack up rewards and then use them to make home-related purchases.
Of course, whenever you use credit cards to accrue rewards, , since the cost of interest on credit card debt can easily outweigh the benefit of any rewards.
Credit card rewards can help defray home improvement costs on both the front end (earning rewards or discounts upfront on renovation purchases) or the back end (using your collected rewards to “erase” purchases, like Woroch did).
Here are some more ways to use credit cards to help offset the cost of home improvement expenses:
Woroch used rewards she had amassed to essentially pay herself back for her chandelier purchase. But another way to reduce such costs is on the front end, by making the purchase with a credit card that gives you rewards or discounts on the home improvement spending you’re doing.
Woroch’s is a good example of such a card. With it, you can select a 3% cash-back category from a list of six, and one of those categories is “home improvement and furnishings,” which includes an extensive variety of expenses like Home Depot purchases, plumbers, landscapers and florists.
The card also offers 2% cash back on grocery stores and wholesale clubs and 1% back on everything else. (There is a combined $2,500 spending cap each quarter on the 2% and 3% categories.)
Another card, the , offers 5% cash back (up to $2,000 in combined purchases per quarter) on two bonus categories of your choice, from a list of a dozen. As of March 2020, those categories included department stores, home utilities and furniture stores — all of which could be helpful for home improvement spending. The card also offers 2% back on an everyday category such as gas, groceries or restaurants, and 1% back on everything else.
If you’re applying for a new card, some offer sign-up bonuses — typically around $150 to $200, once you meet a required spending threshold over a period of a few months. And you can put that “free money” toward housing-related improvement purchases.
The and the both offer healthy sign-up bonuses, as do many other cash-back credit cards from major issuers.
If you plan to spend a significant amount at a particular store as you spruce up your home, you might want to consider getting that store’s co-branded credit card. Many of these cards can reward loyalists handsomely:
If you want to spread out your payments for a purchase over several months, then you might want to consider applying for a , which can save you money on interest.
Store-branded credit cards tend not to offer such promotional windows, but many general rewards credit cards do. Just be sure to pay off the balance before the offer expires and the annual percentage rate goes up.
Employing these kinds of strategies can make investing in home improvements more affordable — and can leave you feeling happier at home. As Woroch says, “We installed the new light ... and I’m in love!”
This article was written by NerdWallet and was originally published by .