Buying a house is the most expensive purchase that many of us will ever make and involves the largest loan we’ll probably ever take out.
Aside from the financial considerations of the down payment and mortgage, you’ll probably be sinking money into renovation projects or into purchases of big-ticket items like appliances and furniture. Therefore, it’s wise to review your credit card strategy so you can squeeze the most out of home related credit card purchases.
Don’t apply for new credit cards until after you’ve closed on your mortgage
Before we discuss the best credit cards for new homeowners, let’s make one thing clear.
You should never apply for a new credit card after you’ve applied for a mortgage and before your home loan has closed.
This is a critical time when the mortgage lender will scrutinize every aspect of your finances.
For example, your mortgage broker or lender will review your credit reports before you submit your application and will continue to receive updates right up until closing. By applying for any kind of new credit, your credit score could go down (at least temporarily). More importantly, it can be interpreted as a need for more credit — and, therefore, an assumption of more debt — even if you just want a new credit card for its rewards. Too many would-be homeowners see their loan applications delayed or denied because they signed up for a new card right before the closing date.
What new homeowners should look for in a credit card
Two things stand out that homeowners want or need from a credit card.
The first is a promotional financing offer on new purchases.
A 0% promotional intro APR offer for purchases is a great way to finance a renovation project or a new refrigerator.
As long as you can pay off your balance before the promotional financing period expires, then you avoid interest charges. The best credit cards in this category offer 0% intro financing on purchases for at least 15 months.
The second feature that new homeowners often seek: rewards for common purchases. For example, a new homeowner might want to earn rewards at a home improvement store for an array of household items.
Best credit cards for home improvement – 0% introductory APR
When you open an account with this card, you’ll immediately receive 18 months of interest-free introductory APR financing on both new purchases and balance transfers, with no fee for transfers made during the first 60 days of account opening. There’s also no annual fee.
Chase Freedom Unlimited® card
This card offers 15 months of 0% intro financing on purchases and balance transfers. It also provides 1.5% cash back on all purchases, and it delivers a $150 a cash back bonus after spending $500 within three months of opening the account. There’s no annual fee.
Capital One® Quicksilver® Cash Rewards Credit Card
Like the Chase Freedom Unlimited card, the Quicksilver Rewards card offers 15 months of 0% intro APR financing on purchases and balance transfers. You get the same 1.5% cash back on all purchases, as well as a $150 cash back bonus after spending $500 within three months of opening the account. There’s no annual fee and no foreign transaction fee.
Amex Blue Cash Everyday® Card
File this one under cards that offer both a promotional intro APR and solid cash back rewards. You start off with 15 months of 0% intro financing on purchases and balance transfers. You also get $200 in cash back after spending $1,000 within three months of opening the account. Finally, you could earn 3% cash back on up to $6,000 spent each year at supermarkets (Costco and Target don’t qualify as supermarkets), unlimited 2% cash back at U.S. gas stations and certain U.S. department stores, and 1% cash back elsewhere. There’s no annual fee.
Best credit cards for home improvement – rewards
Discover it® Cash Back
With 5% cash back on rotating categories, in 2019 you can target the months of October through December where you can shop at Amazon.com, Walmart.com, and Target.com for all your home improvement needs.
Amazon Prime Rewards Visa Signature Card
Online shoppers could save 5% on just about anything imaginable if they couple an Amazon Prime membership with this card. You don’t just save 5% on Amazon purchases, though. You could also save 5% when buying groceries at Amazon-owned Whole Foods Market. In addition, you can earn 2% cash back at restaurants, gas stations and drugstores, and 1% back elsewhere. There’s no annual fee.
Lowe’s Advantage Credit Card
When you’re tackling a home improvement project or buying high-dollar appliances, you’ll likely wind up at Lowe’s or Home Depot. Home Depot has its own credit card, but it doesn’t offer rewards. On the other hand, the Lowe’s card offers 5% off on eligible purchases from the store, as well as special financing options. There’s no annual fee.
Bank of America Cash Back Rewards Card
The Bank of America Cash Rewards credit card offers 3% cash back on specific categories chosen by cardholders. One of these categories is home improvement and furnishings. This means you get 3% back when shopping at home goods and furniture stores and, if you’re hiring a contractor for home maintenance, improvements or repairs, these also fall under this category.
My Best Buy® Visa® card
Best Buy is perhaps best known for electronics, but it sells plenty of household appliances, too. Whatever you buy, you could get 5% back in rewards on Best Buy purchases, or 6% if you’re an Elite Plus member of its rewards program. You could also get 3% in rewards on gas, 2% on dining and groceries, and 1% on all other purchases using the card. All of the rewards must be used for Best Buy purchases. There’s no annual fee for this card.
Target REDcard™ credit card
For many homeowners, Target is a go-to store for household items, from small appliances to living room furniture. The Target REDcard offers 5% off on Target purchases, plus perks like free two day shipping and an extra 30 days to return items purchased at Target. There’s no annual fee.
Note of caution: Some retailer-branded credit card offers charge higher interest rates than traditional credit cards do. So, in order to avoid paying interest, it’s critical to pay off purchases on these cards before a promotional 0% APR expires and the variable APR kicks in or before the next monthly bill arrives.