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Credit card or savings to fund a remodel?

Photo posted per CC-BY-SA-2.0 ,Flickr images reviewed by FlickreviewR 2, David Sawyer from Rancho Murieta, California, United States.

It depends on the circumstances. If you have the savings to pay for the remodel, it’s generally a good idea to use those funds rather than borrowing money on a credit card, which typically has a higher interest rate. Using savings will also help you avoid adding to your debt.

However, if you don’t have enough savings to pay for the entire remodel, you may need to consider using a credit card or taking out a loan. In this case, it’s important to compare the interest rates and terms of different options to determine which one will ultimately be the most cost-effective.

Here are some credit cards that may assist in financing your project:

  • Chase Freedom Flex- this card is a go to for many financially savvy DIYers. The card offers rotating 5% cash-back categories that are often for home improvement stores or utility bills. The savings at home improvement stores is self evident, but how can saving utility bills help finance you renovation project? Easy- by saving on the 5% back on utilities, a person is freeing up capital to use for other purposes, like a new set of blinds for your kitchen window!
  • American Express Blue Cash Preferred – this card give 6% cash-back at grocery stores. Now that is where some real $$$ can add up. If an individual has a big family, that typically equates out to larger grocery bills. Now, by saving on the 6% back on groceries, a person is freeing up capital to use for other purposes… like a new sink faucet!
    • You could earn $250 back after you spend $3,000 in purchases on their new Blue Cash Preferred® Card in their first 6 months of Card Membership. You will receive $250 in the form of a statement credit. Your also will be able to choose from all available American Express Personal and Business Card offers.
  • Be sure to check our post on on money saving tips for grocery planning and shopping.

It’s also worth considering the impact of the remodel on your lifestyle and the value of your home, whether the remodel is necessary and benefit that you will gain after the remodel. It’s always better to consult a financial advisor before making a large financial decision.

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