Should you put your home improvements on a credit card?

Man in a garage writing on a book

Should you put your home improvements on a credit card?

There’s a range of ways to pay for home improvements. To fund larger projects, a secured Home Improvement Loan or unsecured personal loan with a favourable interest rate could be a good option. Or, if you’ve put some money away for a rainy day, dipping into your savings could make sense – after all, renovations to your home are investments that could raise its value.

For smaller scale home improvements, like fitting a new boiler, installing double glazing, or giving the garden a makeover, a 0% purchase credit card could be ideal. If you clear the balance before the interest-free period ends, you’ll spread the cost of the renovation without paying extra. Just bear in mind that paying off the full amount within the interest-free period could mean your monthly repayments are higher and they’ll need paying alongside other bills, like your mortgage and utilities.

Use your savings for home improvements

If you’ve put some money aside over the years, using it to finance larger home improvement projects, such as extensions or comprehensive renovations, could be a way to avoid repayments or interest.

 

‘If you can afford to, putting the equivalent of three months’ outgoings into an instant-access savings account could come in handy for future home repairs and essential improvements.’

 

If you plan to use money from an investment, such as an ISA, it’s a good idea to seek advice from a financial advisor so you can avoid withdrawal penalties. It’s also wise to keep money aside for the projects that aren’t planned, like broken boilers and leaky washing machines. If you can afford to, putting the equivalent of three months’ outgoings into an instant-access savings account could come in handy for these future home repairs and essential improvements.

If you’re currently planning other costs associated with your first home, check out our first-time home buyer’s guide.

Consider a home improvement loan

If you don’t have savings to fund your home improvement, you could consider a personal loan, which means borrowing money without securing it against your home. With an unsecured personal loan, you might be able to borrow more than on a credit card, but be careful not to borrow more than you need. As with any type of borrowing, it's important you know how much you need to pay back each month and that the amount might vary depending on the type of interest rate. 

For more ambitious home improvement plans, you could consider a home improvement loan that’s secured against your property. This type of loan is generally larger than an unsecured loan and has a longer repayment period. The interest you pay could depend on how much you borrow, the length of the loan’s term and the value of your property. You can only get a secured home improvement loan if you’re still paying off your mortgage. If you don’t stick to the repayment deadlines, the loan provider could repossess your home, so crossing the T’s and dotting the I’s is as important as ever.
 

Keep a major renovation within budget

Grand home improvement plans can quickly mount up in cost. So, before adding gold taps and marble floors to your shopping list, set some time aside to plan your budget. Every pound saved before you book the builder or visit the DIY store is a pound you won’t have to borrow and repay.

 

‘One way to think about the cost of home improvements is to consider how much it could potentially add to the value of your home.’

 

Do your research

Start by researching the cost of labour and materials. This is especially important if you plan to use a contractor to carry out the work, as significant savings can be made if you provide them with the items they need for the job.

Will it add to your home’s value?

One way to think about the cost of home improvements is to consider how much it could potentially add to the value of your home. Small individual additions like towel rails and shelves might not make much difference, but a full bathroom makeover could add value to the property. Adding energy-saving solutions like cavity wall insulation and solar panels could also boost its value, as well as creating an on-going saving thanks to lower energy bills. It's worth doing some research of your own to see what could work for you and your home.

Build a buffer into your budget

Remember that home improvements almost always cost more than you expect. Build a buffer into your budget for that possibility, giving you money to draw on in case you’re faced with unexpected expenses or overruns.

When drawing up your budget, check out price comparison websites and home improvement forums for an idea of how much other home owners have spent on similar home improvements..

For more on money management, read our guide to managing money for life’s big events.

Use your credit card to keep track of purchases

Tracking your total building expenses can also be easier when all purchases are listed on one credit card statement instead of being scattered across a mix of cash, credit and debit. If you do pay on a credit card, make sure your repayments are made on time and in full by your payment due date to avoid paying interest.

Find the right tradespeople and builders

Getting the best quote will help you keep home improvement costs down.

Ask friends and family if they know any reliable tradespeople and builders who are well-priced. If you know someone who rents out a property in your area, they could have some useful contacts in the trade.

You should get multiple quotes in the research phase. Try to get three or four for each aspect of the work which break down costs for both labour and materials.

You can also search online for tradespeople and builders, and compare ratings and reviews from other homeowners on tradesperson comparison and review sites. Make sure your chosen tradesperson is properly insured and certified for the job at hand. For instance, gas work requires a Gas Safe registered engineer.

There could be things your builder can’t advise on, such as whether you need planning permission before building starts. You’ll need to check this with your Local Planning Authority.


Use an interest-free credit card

A credit card with a 0% interest introductory period can be an excellent option for funding home improvements. To make the card work for you, it’s important to pay the balance before the interest-free period ends otherwise higher interest charges could apply. And remember that the more you borrow, the more you’ll have to pay back each month to successfully repay it all before the promotional period ends. Once you know how much you need to pay back each month, setting up a Direct Debit is one way to take the hassle out of remembering when to do it.

 

‘...if you’re planning to spend a few thousand pounds refurbishing your home, you might as well get the reward points too.’

 

There are other benefits to using a credit card for home improvements. Some cards give reward points for money spent at certain retailers, so if you’re planning to spend a few thousand pounds refurbishing your home, you might as well get the reward points too.

Check out Barclaycard’s range of cards to find the right one for you.

Section 75 of the Consumer Credit Act provides peace of mind for anyone using a credit card to fund home improvements. As long as you spend between £100 and £30,000, your credit card company is as liable for a breach of contract as the retailer or trader. This means that if you have problem with work carried out on your home, as long as you used your credit card, you can make a claim to the supplier and your credit card company at the same time (although you’ll only recover your money from one of them) - conditions apply. This isn’t possible when paying with a debit card.

Before applying for a new credit card to fund a refurbishment, you should check your credit score. This will give you an idea of whether your application will be successful. If you haven’t done it before, check out our guide on how to check your credit score.

Shop around for the most competitive credit card

If you decide to finance your home improvements with a credit card, take time to do your research. We have a range of cards that can help you.

Paying your balance in full during the 0% interest introductory period means interest rates won’t be an issue, but there are other questions you should ask before you choose a credit card. Compare how long the interest-free period lasts and check for charges on cash withdrawals. Some cards offer cashback if you pay your balance in full at the end of the month.

Woman holding her mobile in one hand and credit card in another

What's next?

If you’re planning home improvements that could benefit from being paid for with a 0% interest card, check out our tool for choosing the right credit card for you.

Learn more about credit