Got Home Improvement Plans? How a Credit Card Can Help

Kimberly Palmer
By Kimberly Palmer 
Edited by Kenley Young

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

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 Bank of America® Customized Cash Rewards credit card. “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.

Homebuying season — 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.

Investing in home improvements

Americans tend to spend a lot on their homes: NerdWallet’s 2018 Home Improvement Report 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, it’s important to pay off your balance each month, since the cost of interest on credit card debt can easily outweigh the benefit of any rewards.

Using credit cards strategically

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:

1. Reward yourself as you renovate

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 Bank of America® Customized Cash Rewards credit card 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 U.S. Bank Cash+® Visa Signature® Card, 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. Those categories include department stores, home utilities and furniture stores — all of which could be helpful for home improvement spending. (See the full list of categories below.) The card also offers 2% back on an everyday category such as gas, groceries or restaurants, and 1% back elsewhere.

  • Fast food.

  • Home utilities.

  • TV, internet and streaming.

  • Department stores.

  • Cell phone providers.

  • Electronics stores.

  • Sporting goods stores.

  • Movie theaters.

  • Gyms/fitness centers.

  • Furniture stores.

  • Ground transportation.

  • Select clothing stores.

2. Leverage sign-up bonuses

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 Bank of America® Customized Cash Rewards credit card and the U.S. Bank Cash+® Visa Signature® Card both offer healthy sign-up bonuses, as do many other cash-back credit cards from major issuers.

3. Evaluate store cards

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:

  • The Lowe's Advantage Card, for example, offers 5% off eligible Lowe’s purchases.

  • The IKEA Visa® Credit Card offers 5% back on Ikea purchases (as well as 3% back on dining, grocery and utility purchases, and 1% back on other purchases).

  • The Amazon Prime Rewards Visa Signature Card offers 5% back at Amazon and Whole Foods (and 2% back at restaurants, gas stations and drugstores, plus 1% back on everything else).

  • The Capital One® Walmart Rewards™ Mastercard® offers 5% back at and purchases through the Walmart app; 2% back on in-store purchases and at restaurants and on travel purchases; and 1% back on everything else

4. Use a 0% intro APR offer for financing

If you want to spread out your payments for a purchase over several months, then you might want to consider applying for a card that offers a 0% intro APR period, 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 Forbes.

Information related to the Amazon Prime Rewards Visa Signature Card and the Amazon Rewards Visa Signature Card has been collected by NerdWallet and has not been reviewed or provided by the issuer of this card.

Find the right credit card for you.

Whether you want to pay less interest or earn more rewards, the right card's out there. Just answer a few questions and we'll narrow the search for you.

Get Started
Get more smart money moves – straight to your inbox
Sign up and we’ll send you Nerdy articles about the money topics that matter most to you along with other ways to help you get more from your money.