​Should you use credit cards to pay for home renovations?

Collaborative Post | Planning changes to your home is an exciting – but often stressful – time. As well as the rush of enthusiasm and creativity, there’s less fun elements to think about, such as logistics and costs. Unfortunately, most of us don’t have the means to simply hire a building firm or decorator, show them your Pinterest board, and sit back whilst our dreams come to life.
 
With the average cost of renovating a 3-bedroom house coming in around £82,900 - £164,300, you’ll likely need to rely on more than just your cash savings to change up your home. Even seemingly small renovations such as redecorating can soon add up and put a strain on your bank account.
 
One option for financing your changes are credit cards – but is that a good choice? In this post, we look at some of the things you’ll need to weigh up.

Photo by Roselyn Tirado on Unsplash

Consider the size of your project

The average credit card limit in the UK usually ranges from £3,000 to £4,000 – far less than a lot of big home renovation projects, such as creating a kitchen diner or remodelling your bathroom. Even if you stagger payments and juggle multiple cards and payment plans, you’re unlikely to be able to cover a significant renovation such as these on a card alone.
 
However, if you’re simply redecorating, or are doing one room at a time, a credit card may well be a feasible option. As well as spreading out your spend for ease, you’ll be able to take advantage of seasonal sales discounts on things like paint and furniture, without having to wait for payday. This can reduce the overall total costs for your project.

Flexible payments

The obvious benefit of a credit card is that it allows you to spend money you don’t yet have, meaning you can start your project sooner. Additionally, this means you can spread out costs and keep work moving, without making funds feel tight or waiting for money to come in – the final bills don’t all have to be paid at the same time.
 
You’ll also have some control over how much you pay back per month. Interest rate considerations aside, you can pay anything from the minimum payment to the full amount, allowing you to adjust the payments in line with your other financial commitments. It’s really important to ensure that you make the payments, no matter how small they seem. Missing payments can lead to bad credit, impacting everything from new credit cards to your mortgage.

The balance between interest and rewards

​Why do some people choose to put home improvements on their credit cards, despite having money in the bank? The answer is perks. There’s a credit card for almost everything, from cashback to hotel or flight points, meaning that you can benefit from both the extended payment period and get a reward for spending.
 
However, it’s good to make sure that you’ll actually use these rewards and be able to pay off your credit card. Otherwise, you’ll find yourself with a lot of loyalty points or cashback, but a higher rate of interest – meaning your spending just costs you more than upgrading your flight or paying for a hotel in the long run.

Manage your money wisely

A credit card can be a good choice for home renovations, but it does rely on you being responsible with your finances. Only borrow what you know you can afford, and make sure you’re paying back at least the minimum amount on time. Otherwise, this useful line of credit will soon become stressful at a time when you just want to enjoy your new home.



Disclaimer: this is a collaborative post.