Americans have already spent billions of dollars on home improvement since the start of the pandemic — and experts are forecasting a whopping $433 billion in home improvement spending in 2021 alone, according to research from Harvard University’s Joint Center for Housing Studies.
But many homeowners could be missing out on added savings for their renovation projects. Of homeowners taking on projects with a cost between $1,000 and $5,000, just 30% opt to pay with a credit card, while 85% use cash from savings, according to the 2021 U.S. Houzz & Home Study from Houzz, a home renovation site.
If you use your card strategically and avoid carrying a balance, a cash back credit card with home improvement rewards can help you maximize every dollar you spend at home improvement stores or on contract work. And with cash already saved to immediately pay off the charge, you can avoid any risk of carrying over high-interest credit card debt.
Many cash back cards even offer 0% APR periods on new purchases so you can finance your project and pay it off over time, without interest, as well as rewards on everyday spending in other categories, to help you save even after you wrap up your project.
Our top pick for cash back on home improvement right now is the Bank of America Customized Cash Rewards Credit Card. Before you gear up to renovate the master bath or reconfigure your landscaping, here’s how this card can add value to your next project:
Before Using a Credit Card for Home Improvement:
Rewards on home improvement purchases are a great way to save on renovation costs, but understand the risks before you sign up. If you don’t have cash to pay down your balance when your statement is due (or after the introductory 0% APR period), you’ll risk taking on high-interest debt, which can make your project much more expensive.
If you’re not sure you’ll be able to pay your balance off, consider holding off on your project until you can save more money, or look into options with potentially lower, fixed rates, like a personal loan or home equity loan.
Why the Bank of America Customized Cash Rewards Credit Card is Good for Home Improvement
There are a few features that boost the no annual fee Bank of America Customized Cash Rewards Credit Card above other cash back options when it comes to home improvement benefits:
Cash Back Rewards
With this card, you’ll get 3% back in a category you choose (among gas, online shopping, dining, travel, drugstores, or home improvement/furnishings), as well as 2% back at grocery stores and wholesale clubs. These rewards rates apply to the first $2,500 in combined choice category/grocery/wholesale club spending per quarter. After that, you’ll earn 1% back, and get 1% back on all other purchases.
If you’re already a Bank of America customer or you’re considering becoming one, see if you can qualify for the bank’s Preferred Rewards program. With enough cash in your eligible account, you could earn 25% to 75% more rewards for each dollar you spend with this card.
If you want to maximize this card’s rewards for home improvement, you could choose home improvement as your 3% category during your project, and use the card solely for home improvement up to $2,500 spent at home improvement stores quarterly. Eligible spending includes everything from hardware stores to repair shops to big box home improvement retailers. Contractors are also eligible, so if you want to bring in an electrician or carpentry contractor, you can still earn rewards on your payment.
But your choice category can offer even more flexibility, depending on your project. If you plan to buy your supplies or new appliances online, you can select the online shopping category. This includes online purchases you make with a wide variety of merchants, including those that might be helpful for your project, like Amazon.com or Walmart.com. You can find more details on eligible merchants for each category on Bank of America’s site.
Maxing out the $2,500 quarterly cap on your 3% home improvement purchases alone would net you $75 in rewards per quarter. If your project is long-term, or you have a few smaller projects to take on, you could net $300 in home improvement bonus rewards each year.
Maximize your home improvement spending even more by using it to score this card’s welcome bonus.
As a new cardholder, you can earn $200 in bonus cash after spending $1,000 on purchases within 90 days of account opening. That’s about $333 per month; but if you max out your 3% rewards category, you’ll spend more than enough to score the bonus. And remember, this cash bonus is offered on top of the rewards you’ll already earn on everyday spending and home improvement purchases.
0% APR on New Purchases
Not only does it offer great cash rewards, but the Bank of America Customized Cash Rewards Credit Card’s 0% APR offer can also give you flexibility to pay off your project over time. There’s an introductory 0% APR on purchases (and balance transfers made within 60 days of account opening) for the first 15 months, followed by a variable APR of 14.24% to 24.24%.
Let’s say you spend $2,500 in your choice category at a home improvement store your first month after account opening. You’ll earn the $75 back on that spending, and if you take advantage of the 0% APR offer, you’ll also have 15 months to pay down your balance before it takes on interest. You can pay off the $2,500 completely in that time with equal payments of $167 per month.
If you do take advantage of this offer to finance your project, just make sure you have a plan to pay your balance in full before the 15-month intro period ends. You’ll quickly erase any rewards by taking on high-interest debt on your remaining balance.
Other Cards to Consider for Home Improvement
While the Bank of America Customized Cash Rewards Credit Card is our favorite option for home improvement, there are a few other cash back cards that can help you score major savings on your next project. Like the Customized Cash Rewards, these cards not only offer cash back on home improvement but also on the everyday purchases you’ll make once your project is complete.
Before you apply for any new card, make sure you compare options that will help you maximize your home improvement spending and continue to add value to your wallet over time.
Wells Fargo Active Cash® Card
The Wells Fargo Active Cash Card doesn’t offer any bonus rewards specific to home improvement purchases, but it does offer a flat rate of 2% cash rewards on purchases. That means no matter where you buy, you can save on your home improvement project. There’s no annual fee, and you can start off earning a $200 cash rewards bonus when you spend $1,000 on purchases within three months of account opening.
The Wells Fargo Active Cash also offers 0% intro APR on purchases and qualifying balance transfers for 15 months from account opening, followed by a variable APR of 15.74%, 20.74%, or 25.74%. This makes this card a solid option if you want to pay down your home improvement purchases slowly and without interest for 15 months.
Citi Custom Cash℠ Card
The no annual fee Citi Custom Cash Card is another option to consider if you’re working on smaller home improvement projects over time. You can earn 5% back on up to $500 spent within your highest eligible spending category each billing period, then 1% back. Eligible 5% back categories include restaurants, gas stations, grocery stores, select travel, select transit, select streaming services, drug stores, home improvement stores, fitness clubs, and live entertainment.
Instead of choosing your category, you’ll automatically earn 5% rewards (up to $500 spent each billing cycle) in the eligible category you spend most. While this removes the need to activate categories yourself, you may also want to be more conscious of how much you spend per category if you’re looking to specifically maximize home improvement in a given month.
You can also finance your home improvement purchases with this card, thanks to a 0% intro APR on purchases and balance transfers for 15 months, followed by a variable APR of 14.74% to 24.74%.
Home Improvement Retail Cards
If you plan to buy the bulk of your home improvement supplies from one place, you might also consider a retail card, such as the Lowe’s Advantage Card or the Home Depot Consumer Credit Card. These cards can offer savings on home improvement spending or financing deals, but there are a few more restrictions than with general credit cards that could cost you.
With the Lowe’s Advantage Card, you get 5% off your Lowe’s purchases or the option to use a special financing offer for eligible purchases. The Home Depot Credit Card doesn’t offer any discounts or rewards, but you can qualify for special financing offers and perks like an extended return period.
Unlike introductory 0% APR offers on traditional credit cards, though, these special financing offers only defer interest. If you don’t pay your balance in full by the end of the promotional period, you’ll be charged interest going all the way back to your purchase date.
If you’re planning to order the majority of your home improvement products or supplies online, on the other hand, the Amazon Prime Rewards Visa Signature Card could make for a good alternative. There’s no annual fee, but you do have to pay for an Amazon Prime membership ($119 annually). The card offers 5% back on Amazon and Whole Foods Market purchases; 2% back at restaurants, gas stations, and drugstores; and 1% back on other purchases. You can also qualify for up to a $150 Amazon gift card upon account approval.
Bank of America® Customized Cash Rewards credit card
- Intro offer:$200
- Annual fee:$0
- Regular APR:14.24% – 24.24% Variable APR on purchases and balance transfers
- Recommended credit:670-850 (Good to Excellent)
- Learn more At our partner’s secure site
Wells Fargo Active Cash® Card
Should You Use a Credit Card for Home Improvement Projects?
Home improvement cash back rewards can help you save on a costly renovation, but you have to be careful with how you spend, and make sure you have a plan for repayment. After all, credit cards tend to charge much higher APRs than other financial products like personal loans or home equity loans.
And while a card with 0% APR on purchases for several months can be useful for paying down your balance over time, make sure you can eliminate the cost before your introductory offer ends to avoid high interest charges.
You should also consider how charging expensive home improvement costs to a credit card may affect your credit. If you run up a balance close to your credit limit, you’ll risk increasing your credit utilization ratio, which could hurt your credit score. If you have a very costly project to complete, or you’re not sure you’ll be able to afford the cost, it might be worth waiting until you can save money to put toward your home improvements or looking into alternative home improvement financing.
Before you open a new credit card to help you save on your next project, make sure you choose one that offers benefits you can use for the long haul. Look for a cash back card with exceptional rewards not only on home improvement but on your most frequent everyday spending categories too, like dining, groceries, or gas.