Opening credit cards for remodeling purchases.

9 Replies

Greetings BPers,

What is everyones thoughts on opening a rewards credit card and charging remodeling costs (about $15k) on it? I know interest rates are higher on these cards and my credit score would take a hit (as opposed to using my existing card) but does anyone have any experience doing this? Is it worth it? Has anyone does this and had it affect them later?

Thanks in advance for your replies,

Tim

 @Tim Coppola undefined I was actually thinking of doing the same but I'm trying to figure out a way on how to use 0% APR and transfer so you don't pay interest the thing is it's been difficult;t for me to find someone willing to so how the process actually work. If I where you I would rather do this because after the 0% APR ends you can just roll it over to another card.

@Tim Coppola This is called credit card hacking and if you search the top of the page it is a common thing. If you are mature enough and can handle the credit cards then it is a reliable option. 

You mention "rewards" but also "interest rate", so I'm just curious what is your intent is in opening a new card?  Is it to earn rewards or pay a low interest rate?  I have several rewards credit cards that I use for all my purchases, but the interest rate is very high.  However, that doesn't concern me because I always pay the balance in full and have never paid any interest.  If you are opening the card and charging on it just to earn rewards, but also plan on carrying a balance and paying interest, I think you'll end up losing money in the end. 

@Kyle J. Yeah I have my normal credit card I use and pay off every month. I was just curious as to if it's worth opening a new card with better rewards. But as you mentioned I would be carrying a balance and paying the high interest so it probably wouldn't be worth it. The other option I was looking at was what @Jeiby V. mentioned with 0% APR cards. I like Chases' Freedom Card which is 0% for 15 months and you get cash back as well. It's not a lot but it's something and I'd easily have this paid off in 15 months.

bank of america signature card does 0% 12 months and if you charge on it there are no fees,  so this even gets around the 3% balance transfer fee. And anything in 12 months time charged gets 0%.   If you take a deposit off the card its 3% i believe and u must do that in the first 60 days. 

In Just charged 14k to to this card on the latest rehab.  

@Tim Coppola , I do this every time I start a new project. But I have really great credit and the means to pay the card off every month. Since you will be carrying a balance, this probably won't be the best choice for your rehab. But keep it in the back of your mind for the next one or the one after that. 

The big box home improvement stores have their own card, and they will offer no interest for up to 24 months depending on the size of the purchase. No interest is better than interest. You DO have to make the minimum payments, and if you don't pay off the entire balance before the promotional period ends, you will be charged the entire amount of interest for the entire life of the loan starting at day one.

This is a great way to earn extras life travel benefits, but only if you can pay off the charges every month.

Mindy Jensen, Real Estate Agent in CO (#FA100049656)

@Mindy Jensen Thanks for the reply. I actually would be making more than the minimum payment every month and plan on having the card paid off in the 15 months. I have the cash to pay for the remodel but that would leave me with no reserves which I am not comfortable with. That is why I am looking at using a credit card, my reserves wouldn't be growing much but it wouldn't be depleted.

I have really good credit too and am worried that doing this might hurt that. Do you find that opening a new credit card every time lowers your credit score much or since you make the payments does it not affect it?

@Tim Coppola , if you have really good credit, and continue to make the monthly payments on time, this shouldn't have too big an effect on your score. Especially if you are just opening one or two at a time. If you open a whole bunch of them, that can mess with your available credit line, and make you look like a risky credit bet. 

Mindy Jensen, Real Estate Agent in CO (#FA100049656)

@Mindy Jensen Thank you very much for your help. I have good credit and would be paying off more than the minimum every month. I only need the one for now but for the future it's good to know that having two of these open may not affect my credit score much. Thanks again!

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