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Home Depot Credit Card: Is It Right for You?

Oct. 2, 2018
Credit Cards, Rewards Credit Cards
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Home improvement superstore Home Depot accepts Visa, MasterCard, Discover and American Express credit cards, in addition to its own store-branded credit card.

In the Nerds’ analysis, a Home Depot credit card is worth carrying only if you expect to make multiple major purchases at Home Depot and want time to pay them off without interest. Even then, you have to be careful about repayment, or you can still get hit with a big interest bill.

Home Depot credit cards provide no ongoing rewards for those who shop at Home Depot. So even if you frequently shop at the store, you’d probably be better off with a flat-rate rewards card. See below for recommendations.

What Home Depot credit cards are available?

Home Depot offers two very different cards for consumers: The Home Depot Consumer Credit Card and the Home Depot Project Loan Card.

The Home Depot Consumer Credit Card

This is a store credit card, accepted at Home Depot and HomeDepot.com. The Home Depot Consumer Credit Card has a $0 annual fee. Unlike many store credit cards, it doesn’t give you rewards or discounts for purchases. Its main benefit is that you get six months of deferred interest on purchases of $299 or more. You’re also eligible for longer deferred-interest periods during special promotions. In February 2018, for example, there were deferred-interest promotions of 12 to 24 months involving appliances, fencing, window treatments and certain bath products.

However, it’s important to understand what “deferred interest” means. When a card offers deferred interest, it’s not waiving the interest. Rather, it’s setting it aside until later. If you pay off your purchase by the end of the deferred-interest period, you’re fine. But if you carry a balance past the end of the period, you’ll be charged interest on your entire purchase, going back to the day you made it.

» MORE: The dangers of deferred interest

Cardholders get a full year to make returns, compared with three months for non-cardholders. On occasion, new cardholders have received a discount for their first purchase — say 10% off or $25 off. Keep your eye out for such an offer.

The Home Depot Project Loan Card

This isn’t a traditional credit card; rather, it’s a card issued in conjunction with a Home Depot project loan. Home Depot makes loans available up to $55,000 for major projects like kitchen or bath remodels, a new roof or an addition. You access your loan funds with the Home Depot Project Loan Card, which is a MasterCard you can use anywhere.

You have six months to spend the money; during that “draw” period, you are required to pay only interest on the money you borrow. After the draw period is up, you have 84 months (seven years) to pay off the balance. The APR as of February 2018 was 7.99%.

Should you get a Home Depot credit card?

If you’re anticipating a major purchase (or several) at Home Depot and would like to stretch the cost over a few months without interest, it might be worth looking at The Home Depot Consumer Credit Card. If your project dovetails with a current promotion, or if you can get a discount on your first purchase, so much the better.

But if your credit is good, look instead to a card with a 0% introductory APR on purchases. These 0% periods are typically longer than six months — and these credit cards actually waive the interest during the 0% period, rather than defer it. That means if you still have an unpaid balance at the end of the 0% period, you’ll be charged interest only on your balance going forward.

If your Home Depot experience is just a steady stream of smaller projects — a few two-by-fours and nails one week, painting supplies the next, a new toilet for fall — you won’t get any value out of a Home Depot credit card. As mentioned, you don’t get any rewards for shopping at Home Depot. You’d be better off getting a credit card that gives you a flat 1.5% or 2% rewards rate on all purchases. Pay your balance in full each month, and you’ll never be charged interest.

The terms on the Home Depot Project Loan Card are best compared with those on a home equity line of credit from a bank or credit union.

Alternatives to a Home Depot credit card

If you have Lowe’s home improvement stores in your area, consider the Lowe’s Consumer Credit Card rather than The Home Depot Consumer Credit Card. The Lowe’s card gives you 5% off all purchases at Lowe’s, with some products, brands and services excepted. For purchases of $299 or over, you can opt for deferred-interest financing instead of the 5% discount. There’s no annual fee. This card can be used only at Lowe’s.

For cards you can use anywhere, consider these:

Cash-back cards with a 0% APR period on purchases

The Chase Freedom Unlimited® gives you a flat 1.5% cash back on every purchase. The annual fee is $0. You can redeem rewards in any amount for statement credit or a direct deposit into a bank account. This card comes with a solid sign-up bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. And if you want to finance a major purchase, it comes with an introductory APR of 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 16.74% - 25.49% Variable APR.

The Capital One® Quicksilver® Card - 0% Intro APR for 15 Months gives you a flat 1.5% cash back on every purchase, just like the Chase Freedom Unlimited®. The annual fee is $0. You can redeem rewards in any amount as a check or statement credit, and this card also comes with a sign-up offer: One-time $150 cash bonus after you spend $500 on purchases within 3 months from account opening. This card, too, has an interest-free period: 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 14.74% - 24.74% Variable APR.

FLAT-RATE REWARDS CARDS

The Citi® Double Cash Card – 18 month BT offer gives you 1% cash back on every purchase, plus another 1% back when you pay them off. Reward redemption options include a statement credit or check, and there’s a $25 minimum. The annual fee is $0. Though many top rewards credit cards require you to have excellent credit, you can qualify for the Citi® Double Cash Card – 18 month BT offer with only good credit.

The Capital One® Venture® Rewards Credit Card is a good option for those who want travel rewards rather than cash back. It gives you 2 miles for every $1 you spend on anything. Miles can be redeemed for credit against travel purchases at a rate of 1 cent per mile. There’s a great sign-up bonus that you might be able to earn by charging a major project at Home Depot: Enjoy a one-time bonus of 50,000 miles once you spend $3,000 on purchases within 3 months from account opening, equal to $500 in travel. The annual fee is $0 for the first year, then $95.

IF YOU HAVE AVERAGE CREDIT

The Capital One® QuicksilverOne® Cash Rewards Credit Card works much like the regular Capital One® Quicksilver® Card - 0% Intro APR for 15 Months. You get 1.5% cash back on every purchase. There’s no sign-up bonus, however, and there’s an annual fee of $39. Since this is a card for those with only average credit, the interest rate is on the high side: The ongoing APR is 24.99% Variable APR. Make your first five payments on time, and Capital One may raise your credit limit.

» MORE: NerdWallet’s best store credit cards

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