Q: I’ve been looking to remodel my living room and kitchen with new cabinets, fixtures and appliances. I have decent credit and a few mostly unused credit cards. Is paying for these home improvements with credit cards good idea?
A: Credit cards are enormously useful in remodeling-related purchases, provided you use them wisely. Here are just a few of the advantages of buying services and products with a credit card.
Paying contractors. Contractors who accept credit cards also agree to the legal terms set by the credit card companies. In the unfortunate situation that work is left incomplete or subpar, you can dispute the credit card charges, giving you potential leverage when you’re unsatisfied with a job. That’s a level of security paying with cash or check can’t guarantee.
Buying appliances. Using a credit card for big-ticket appliances and electronics like refrigerators, dishwashers, washers and dryers, and TV sets can help rack up cash back or airline miles for rewards cardholders. But for many people, this is just a bonus compared to the benefit of an extended warranty. Along with a manufacturer’s warranty, many credit cards offer extended product warranties if your product bites the dust in the first few years of purchase. Some cards also offer price protection if the purchase price gets lowered within a certain time frame.
Shopping online. The most unique fixtures and accent items can often be found online. When you make purchases online, credit cards typically offer protection against fraudulent charges along with items lost or damaged with shipping. And if there is an unexpected problem, you can keep your cash in-pocket while the dispute is settled, and not the other way around. (Note: Make sure that your credit card offers these benefits before making a purchase.)
Clearly, credit cards are incredibly useful for major home purchases, but it’s important to manage them well to avoid outstanding bills, unmanageable debt or low credit scores. Now that you know what you want to purchase with credit cards, here are a few tips for getting the most out them without incurring unexpected costs or problems.
• Make payments on time;
• Pay more than the minimum;
• Read your card agreement and know your terms;
• Check monthly statements for accuracy;
• Stay well below your credit limit;
• Report lost or stolen cards immediately.
Carly Kogler and Robert Martin are vice presidents of Capital One Spark Small Business Card, Washington State, a member of the Master Builders Association of King and Snohomish Counties (MBAKS). If you have a home improvement, remodeling or residential homebuilding question you’d like answered by one of MBAKS’s nearly 2,800 members, write to email@example.com.