Personal finance writer
Specializing in new trends in credit
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If you’re renovating your home or refreshing your furniture, you may have already considered using a credit card to finance your purchases interest-free.
Homeowners and renters have been using cards with 0 percent purchase offers for years to help pay for their biggest purchases over time. But did you know that you could also earn as much as 2 to 5 percent cash back on every home-related purchase?
A growing number of credit cards now cater to homeowners and interior design enthusiasts by offering significant rewards in exchange for home-related spending.
New offers from Synchrony, Bank of America can help renovators save
Synchrony Bank launched a new card in February – dubbed the Synchrony Home credit card – that offers 2 percent cash back on purchases that cost less than $299.
“The Synchrony Home credit card gives our customers more buying power and the cash back rewards they’re looking for to help meet their home desires,” said Synchrony’s Neeraj Mehta in a news release.
Meanwhile, Bank of America recently updated its Bank of America Cash Rewards credit card so that cardholders can choose which purchase categories earn 3 percent cash back (on up to $2,500 worth of quarterly purchases). As a result, cardholders can potentially earn up to $75 a quarter (or $300 a year) on the category of their choice. One of those new bonus categories: home improvement and furnishings.
Alternatively, Bank of America cardholders who like to source their household finds on artisan-powered websites, such as Etsy, Society6 and GlobeIn, can opt for 3 percent cash back on online purchases.
Similarly, the two-year-old Amazon Prime Rewards Visa Signature card awards furniture and interior design shoppers 5 percent cash back for every purchase they make on Amazon (and at Whole Foods). Considering that Amazon has a huge selection of home-related purchases, including furniture, home décor, lawn and garden supplies and more, the Amazon Prime card alone could potentially net renovators hundreds of dollars worth of cash back.
Other cards that award significant amounts of cash back in exchange for home-related purchases include:
- U.S. Bank Cash+ Visa Signature: Similar to the Bank of America Cash Rewards card, this customizable credit card allows you to choose from a variety of bonus categories, including department and furniture stores. It also gives cardholders significantly more cash back per dollar spent: Cardholders get 5 percent cash back on up to $2,000 in quarterly purchases. As a result, cardholders who spend up to $8,000 per year on home-related purchases could potentially earn up to $400.
- Lowe’s Advantage card: This home improvement store card shaves 5 percent off any Lowe’s purchase that you charge to your card. The discounts are unlimited, and so if you’re renovating your home and spend thousands on appliances, lighting, building material or other home-related supplies, you could potentially save hundreds of dollars just by using your Lowe’s card.
- Target Redcard: Similar to the Lowe’s Advantage card, this store credit card offers an unlimited 5 percent discount on any Target purchase, as well as an annual 10 percent off coupon.
- My Best Buy Visa card from Citi: This open loop store card offers similarly big savings. It awards 5 percent cash back on any Best Buy purchase, including appliances, furniture, electronics and more. If you’re an Elite Plus member of Best Buy’s loyalty program (to get it, you have to spend $3,500 at Best Buy or charge at least $3,500 per year to your Best Buy Visa card), you’ll earn 6 percent cash back on Best Buy purchases. Cardholders also get 2 percent cash on dining and grocery purchases.
- Costco Anywhere Visa Card by Citi: In addition to 4 percent cash back on gas purchases and 3 percent cash back on dining and travel, this open-loop store card awards 2 percent cash back on every Costco purchase – a nice perk for Costco members who like to buy their furniture and appliances at discount-granting warehouse clubs.
- The Chase Freedom or Discover it® Cash Back cards: Both of these rotating bonus cards frequently offer 5 percent cash back (on up to $1,500 worth of purchases, after you activate) at least once per year at a retailer that offers home-related items. For example, Discover it will offer 5 percent cash back on Amazon purchases in the fourth quarter of 2019. Meanwhile, Chase hasn’t announced the bonus categories for the rest of 2019. But in the past, the Freedom card has offered bonuses on department store and wholesale club purchases.
See related: Make the most of an online shopping bonus category
You may have to give up promotional financing
The recent growth in home-related rewards has made it easier for renovators and design enthusiasts to earn a substantial amount of cash back on purchases they were already planning to make. But if you can’t afford to pay off your new purchases in full each month and aren’t able to secure interest-free financing, the rewards may not be worth it.
Some rewards cards with home-related bonuses don’t offer especially long promotions. The new Synchrony Home card, for example, only offers 6 months of promotional financing. You may be able to get 12 to 60 months on select purchases; but it will depend on the store.
Similarly, the Lowe’s Advantage card offers just 6 months of promotional financing, while the My Best Buy card asks cardholders to choose between rewards and lower rates: You can either get promotional financing or 5 to 6 percent cash back.
Others, such as the Target Redcard and the Costco Anywhere Visa, don’t offer promotional financing at all. That makes spending a lot of money on these types of cards much riskier, since the APRs tend to be steep.
Before you settle on a card, shop around and look carefully at the terms. Depending on your financial situation, you may find that a card that offers less cash back, but a lengthier 0 percent promotion, is a smarter choice.