Cash-Back Rewards on Your Home Improvement Project

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Have plans to spruce up your home this season? Maybe you’re replacing old landscaping with new shrubs and trees, or perhaps you’re adding a deck or paver patio. Or you may just be cleaning and freshening up your space with some paint.

Whatever your project is, you will likely be at your local home improvement store buying necessary supplies to tools. And you could be spending a lot of money, too.

If you’re savvy and don’t mind signing up for rewards cards, your spring projects could easily translate into cash-back or travel rewards. Here are some of the top strategies to consider.

Sign-Up and Cash-Back Bonuses

One of the biggest benefits of rewards cards is the upfront bonus they offer if you meet a minimum spending requirement within a few months of account opening. Make sure to consider the cost of your project to determine which cards you should sign up for to maximize this benefit.

If you plan to spend $4,000 on a new patio and outdoor furniture, for example, a card like the Chase Sapphire Preferred might be ideal. This card offers 60,000 points worth $600 in gift cards or $750 in travel after you use it for $4,000 in purchases within three months of account opening.

If your project will cost a lot less, on the other hand, you can pursue a signup bonus with a lower requirement. The Capital One Quicksilver Cash Rewards Credit Card is a good example: It offers $150 cash-back after you use your card for $500 in purchases within three months of account opening.

Maximize Credit Card Category Bonuses

For example, the Discover It Cash Back card offers 5% back on your first $1,500 spent in categories that rotate each quarter. Through June 2020, this includes Home Depot. Starting in July, you can also earn 5% back on stores that accept PayPal. Because many online home improvement stores accept PayPal, it's still a solid option for boosting your earnings on home improvement supplies purchased with your card.

Ask Contractors If You Can Pay With Plastic

You may find that some contractors you work with actually accept credit cards. If they do, you may be able to charge their services to your rewards card to earn travel credit or cash-back.

Make sure to ask whether they charge a fee for using credit and, if so, how much it is. If they charge a 2.5% fee and you’re only earning 1% cash-back, then using your card won’t be worth it.

Pay Out-Of-Pocket for Whatever You Can

Also, make sure you think outside the box in terms of which components of your home improvement project you can cover. Even if you’re working with a contractor, it’s possible you could pay out-of-pocket for some of the supplies, rather than have the contractor pay for it and include it in the total cost. That way, you can get rewards for buying the supplies.

If you’re building a room addition, check with your contractor to see if you can pay out-of-pocket for items like ceiling fans and light fixtures. If you’re having your whole home painted, ask if you can purchase the paint and supplies and pay your painter separately for their work. Anything you can buy for your project will help you rack up more cash-back or travel rewards.

Consider These Other Home Renovation Strategies

Before you pull the trigger and sign up for a new rewards card, let’s talk about the elephant in the room, the interest that credit cards charge. While cash-back and travel rewards can be lucrative, the credit card rewards game is really only for consumers who plan to pay off their balance in full right away.

By contrast, if you’re planning to carry a balance, the math doesn’t add up. The average credit card interest rate is over 16%, which quickly dwarfs the average 1-2% cash-back you’ll earn with a rewards card. It’s easy to see how, if you carry a balance, racking up rewards on your spring or summer project is a losing proposition.

If you need to pay for your project over time, however, don’t despair. You could sign up for certain balance transfer cards that offer 0% APR on purchases to save money on interest for a limited time, although you’ll likely miss out on rewards.

You could also consider a home equity loan or HELOC to pay your home improvement project, both of which tend to come with low-interest rates since you are using your home as collateral.

Another alternative is to use an unsecured loan to finance your renovations. However, since the loan is not secured by collateral, you may have higher interest rates or a short term for paying the sum back.