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When you own a home, the need for repairs can arise at pretty much any time. And when a large repair comes up, you may need to delay it due to a lack of funds.
In 2023, 82% of U.S. homeowners needed to make at least one repair, according to Today’s Homeowner. And among those waiting to make repairs, 59% said they were doing so because they couldn’t afford the work immediately.
Putting off home repairs isn’t always possible, though. If your heating system goes kaput in January, you can’t just wait until June to fix it when you still have several months of cold weather ahead of you.
Now, if you’re facing a huge home repair you know you can’t pay off right away, then your best move is generally to finance it. You could take out a personal loan or home equity loan to cover your costs. You could also look at a HELOC if you want more flexibility with the amount you can borrow.
But in some situations, charging a major home repair on a credit card may be your best option. Here’s why.
When you have the money to pay your bill
Personal and home equity loans are often a better choice for financing purchases over time than a credit card. Both loan options give you a fixed interest rate on the sum you’re borrowing, and both tend to charge less interest than what many credit card companies charge.
However, if you have the money to cover your home repair in full, then putting it on a credit card makes sense. If you pay your balance when it comes due, you won’t rack up interest charges on your purchase. What you might get, however, is cash back or reward points — and a large amount of them.
So let’s say you’re facing a $10,000 home repair. You don’t want to charge $10,000 on a credit card and pay it back over several years. The interest you accrue in that case could be enormous.
But if you have $10,000 or more in your emergency fund, you could put the charge on your credit card and then dip into your savings to pay the bill. If you get 1% cash back on your purchases, that’s still an extra $100 coming back to you.
Make sure there’s no credit card fee
Putting a home repair on a credit card could make sense when you have the money to pay your bill in full. But before you do, check with the contractor or company doing the work for you and make sure there’s no surcharge for using a credit card. If there is, then you may want to write a check.
Let’s say there’s a 3% surcharge for all credit card transactions, and you’re looking at a $10,000 bill. Using your credit card is going to cost you $300. So even if you’re eligible for $100 back, you’re losing out financially by swiping your credit card. In this situation, paying in cash is your best move if you’re fortunate enough to have the money on hand.
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