Credit Card Strategies for Home Expenses
Updated: Jul 3
Above: Salamander in Middleburg, VA from a Points Stay: Image by Author
While some people are very anti-credit card, and you are playing with fire when playing with credit cards (pitfalls), I personally have reaped many rewards from credit cards in my lifetime, including the majority of expenses for my Disney engagement, honeymoon, & the majority of expenses on other travels for the past 5 years.
Credit Card Strategies to Consider:
Keep in mind that for the below, it's often ideal to stack more than 1 strategy, such as a new sign-up bonus & a promotional APR or a new sign-up bonus & a balance transfer.
New Sign-Up Bonuses (Greater Than the Amount Charged in Some Cases)
A signup bonus is an excellent method for lessening the burden of a big purchase. If you have the $ for the purchase, it's still often best to go after a signup bonus. If you don't have the $, it's often best to go after either a signup bonus with a 0% promo APR or a combination of a signup bonus and a card with no balance transfer fees.
In some cases, the value of the signup bonus can be close to or even exceed the amount of the charge. For instance, I acquired the Citi Premier card, which had an 80k point signup bonus. The spending required on the card was $4k, and the points acquired were sufficient to cover an over $3600 stay at the Salamander in Middleburg. Not exactly over in that case, but there are many cases where it can be over.
One example where the redeemed value of a signup bonus can be over the amount of spending required is with the Amex Platinum. At the moment, my dad's referrals are offering 126k Amex Membership Rewards for those who spend $6k within the first 6 months. If you were to get that, you'd have at least 130k Amex Membership Rewards. If you then stacked that with a recurring 30% transfer promo to Virgin Atlantic, you'd have 170k Virgin Atlantic Rewards. 170k Virgin Atlantic Rewards is the exact amount needed to go from the Eastern US to Japan in ANA 1st class, round trip, or 2 people 1 way. Considering that you could save over $16k this way, I consider it a very solid option.
If you'd like recommendations on a credit card, let me know. It's one of my top areas of expertise. Keep in mind that I may receive a referral incentive at times for my recommendations, but that's not always the case, as sometimes the best card(s) for you won't include a referral link option.
Balance Transfer Cards w Lower Interest or No Interest & No Balance Transfer Fees
Sometimes the best route is to acquire a large signup bonus initially that has no promotional APR, then almost immediately balance transfer to another card with a lower APR or no APR. In some cases, you might ride out an initial promo APR period of a year or 3 prior to acquiring another card for an extended promo APR period.
When performing a balance transfer, be sure to watch out for balance transfer fees, but keep in mind that some cards have no balance transfer fees and a 0% promo APR. I go over some of those & more in my article on balance transfer cards here.
Promotional APR (i.e. 0%)
Promotional APR (i.e. 0%) can be included alone on a signup offer, combined with a $ or points earning sign-up offer, can be offered by your current credit card issuers in the mail on a long-existing card, or can be available via a balance transfer.
If the card you're paying on has 0% APR, it's often best to be funding (or have already funded at the time of purchase) a separate account dedicated to the debt payoff that's high interest accruing (i.e. 5.17% APR in today's banking rates for large accounts like CFG for accounts over $1k & 6.17% APR in today's rates for accounts up to $1k with DCU as of 6/26/23) rather than paying off the card directly immediately.
Here's a long list of 0% promo APR cards by Doctor of Credit.
Credit Cards Good for Home Expenses on a Recurring Basis
Often merchant category coding won't work out well for paying contractors and getting bonus spending on existing cards that are not new unless there is a temporary promotional period like the 5% cashback on up to $1500 in general spending I'm currently receiving on my Discover It card.
Typically merchant category coding for home expenses will be ideal for your purchase of supplies for a contractor's work or supplies for your own work. If the contractor won't let you purchase it, or if they can purchase it for less, it may not make sense.
The Amazon Prime card is a good option for 5% on Amazon, with many goods for supplies being available at Amazon.
A solid discontinued card that some still have, including myself, is the Citi Dividend card, which sometimes has 5% cashback on home improvement stores or Amazon for up to $6k in a year for one quarter in a year. With comparable alternatives such as from Chase Freedom Flex & Discover It, they tend to cap cashback at $1500/quarter instead of a combined maximum annual rate like the Citi Dividend does.
For a high-rate general spending card, the Capital One Venture X Card is a solid option. The $300/yr travel credit combined with the 10k points/yr make the $395/yr annual fee a net positive without any spending or benefits of the card, since 10k points are valued at $185 according to TPG. That's not even considering the 75k (currently) sign-up bonus or the lounge perks. If you were to acquire a Capital One Venture card, that has a lower annual fee, it's not nearly as good of a net return as the Venture X.
If you're a business owner, such as an investor, and considering a high-rate general spending card, consider the Amex Blue Business Plus. It earns 2x Amex Membership Rewards per dollar spent on up to $50k/yr in general spending with no annual fee. If you run out of room with $50k, get 2 as I did. While TPG values Amex MR higher than Capital One Miles, I and some other experts don't value them differently, i.e. One Mile at a Time.
If shopping at Lowes and a business, consider the Lowes business cards, especially the Amex Lowest Business Rewards Card for 5% off every day. There's also an option for individuals to get 5% off at Lowes.
More Information:
Alternatives to Credit Cards
For alternatives to credit cards, see my article that covers a wider variety of options for repairs & some options to combine with a credit card strategy like non-profit assisted strategies. It's not uncommon for a multi-pronged approach to be best.
Image courtesy DCU
Pitfalls to Credit Cards
Promo APR Pitfall: 1. I've seen where a buyer I was working with used a 0% promotional APR with the full intent of paying it off prior to a home purchase, only to allow that 0% promotional APR to become a burden that wasn't paid off that prevented the buyer from purchasing.
2. Be sure to read the fine print prior to getting any intro APR card.
Balance Transfer Pitfall: 1. If you are going to get a card where you may go beyond the balance transfer period, consider getting an additional balance transfer card prior to the end of the period and transferring the balance to a new card with an intro low or 0% APR.
2. Keep in mind the following language often present: "If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month."
General Pitfalls:
Be sure to make at least your minimum payments on your credit cards.
I do not recommend using credit cards if you are carrying interest-accruing balances with rates higher than what you would be paying on a comparable personal loan.
For more pitfall information, go to my article on the subject of CC pitfalls here.
Related:
1. Financing Repairs/Renovations Prior to Sale
2. Cost Guide to Repairs & Remodeling
3. Where to Find Equipment To Borrow/Lease/Purchase for Your Property Repairs/Reno/Cleaning
4. "How to Understand Special Promotional Financing Offers on Credit Cards" by the Consumer Financial Protection Bureau