How do Home Improvement Credit Cards Work?

Home improvement credit cards can be great for homeowners who are looking to do some home improvements, renovations, or remodeling. It seems that every home improvement store, from Lowes to Home Depot to Sears to Menards and various other stores have their own branded credit card that can be used solely at their stores. These types of cards have a number of advantages and can help make it more affordable for you to pay for needed home improvements.

Home Improvement Credit Cards vs. Traditional Credit Cards

Home improvement credit cards work basically the same as any other type of credit card. The big difference is that most of these credit cards can only be used at the store issuing the card. For instance, a Lowes credit card can only be used at Lowes (although you can use it at any Lowes location around the country and online at Lowes.Com). Of course, the Lowes credit card for home improvements is not your only option.

Rewards for Using Home Improvement Credit Cards

Like most credit cards, the best home improvement credit cards aren’t just a good way to get those urgent and planned home repairs paid for quickly, they are also beneficial in other ways. Some cards offer a discount off your purchase when you use the card. Others offer rewards based on a point system. Once you reach a particular number of points, you can exchange those points or redeem them for everything from cash to merchandise to dollars off merchandise. Each card has its own reward system.

High Approval Rate for Home Improvement Credit Cards

Another good thing about home improvement credit cards is that they often are available to consumers who have less-than-perfect credit. Many people with damaged credit are happy to learn that they can qualify for these types of cards so that they can afford to repair their homes or make other renovations, while building their credit at the same time.

Reports to Major Credit Bureaus

Like a traditional credit card, home improvement credit cards report to the major credit reporting bureaus, including Trans-Union, Experian, and Equifax. For those who are looking to build credit, this type of revolving credit can add valuable points to your credit score with every monthly payment that you make.

Interest Rates

For most store lines of revolving credit and home improvement credit cards, the interest rates that you can expect to pay are much like the same interest rates that you will pay with your regular credit card. Many times, these cards are issued with an interest rate that is based on your credit score. For this reason, if you have an excellent credit score, then you can expect to get a lower rate of interest than if your credit score is less than ideal. And just like a traditional Visa or MasterCard credit card, you can oftentimes find introductory offers that give you zero percent interest for a particular amount of time, like the first six months to one year. During this time, you pay no interest on the charges that you make, so if you pay your balance in full during the introductory period, your purchase will cost you less than if you wait until interest begins to accrue.

Other Types of Home Improvement Credit Cards

It is important to note that there are some regular credit card companies that have introduced their own home improvement credit cards. For example, Chase has introduced a home improvement rewards type credit card that gives you three percent cash back on any home improvement purchases that you make, regardless of the store where you make your purchase.

5% cash back rewards on home improvement

Updated: 5/1/2012