Buying a home? Rewards cards and balance transfers can help

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Score cash back and points with purchases and time to pay off your new debt

Personal Finance Writer
Expert on fraud, travel and debt.

How cards can help with all along your homebuying journey

The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.

Whether you’re purchasing
your first home, moving to a larger house to accommodate your growing family
or downsizing because of your empty nest, you’ll likely be pulling out the
plastic to pay some of your costs.

With every dip or swipe of
your rewards card for new-home
expenses, such as paint, new furniture or landscaping, you almost
certainly could be earning cash back or scoring big rewards to help pay for a future
vacation.

“If you’re making big
purchases like new appliances, home inspections and furniture, you can get a
quick round of rewards for your spending,” says Melinda Opperman, executive vice president of the nonprofit credit.org.

All that spending adds up,
though. If you’re worried about running up debt, a balance transfer card
can provide breathing room of a year or more at no interest to pay off those
bills.

“Just be sure you have a
plan to get the balance paid off as fast as possible,” Opperman says.

Here are five ways your credit
cards can help you in your home-buying journey:

1. Home inspections,
contractors, moving expenses

2. Home
improvements, home warranty, homeowners association dues


3. Food, drink, lightbulbs
and household cleaners


4.
Furniture, landscaping, storage for all your
stuff

5. Balance transfers, zero
interest, breathing room

Before the
move

1. Home inspections, contractors, moving expenses


Ask your home inspector and contractors if they are set up to take plastic.

If your real estate agent or
contractors don’t take credit cards, it often is because they don’t want to pay
the merchant transaction costs. There are ways to get around this, though.

For example, if you’re repainting your new
home and your contractor doesn’t accept credit cards, Paige NeJame,
franchise owner of CertaPro Painters of the South Shore and Boston, suggests
offering to call in to Sherwin-Williams with your credit card to pay the
painting contractor’s supplies.

It’s a win-win for the
contractor and the home buyer. The contractor gets the needed supplies and
doesn’t have to worry about credit card fees and the homebuyer “gets to fly to
Europe or wherever 20,000 points will take her,” NeJame says.

Bonus tip: Moving expenses – whether loading a U-Haul or a hiring a
moving company – will cost hundreds (renting a truck) or thousands
(professional movers) of dollars. Once you’ve closed on your home, putting your
moving costs on a new credit card with a big sign-up bonus can help
you to meet the minimum spend to unlock those points or cash back.  


Lining up home services

2. Cable/streaming, internet, home warranty, HOA

As you settle into your
home, you’re apt to be making monthly payments for cable (or streaming
services), Internet, a home warranty service and your homeowners association
(or condo fees).

If you can put these
monthly charges on your rewards cards (without incurring a convenience fee),
you’ll bankroll a haul of points through the course of a year.

The trick then is
deciding what kind of rewards you want.  

When you’re looking for a
travel credit card, “not all miles and points are created equal,” says Daniel
Tulbovich, co-founder of RewardExpert.com.
His recommendation: “Start with your goal, not the card.”

So, if your dream is to
fly to Paris for vacation after you’ve moved into your new home, check to see
which major airlines fly to your destination and pick a card whose points can be redeemed on that airline. If you get approved for a rewards
card with a big sign-up bonus but can’t redeem your rewards for the place you
want to go, “you’ve kind of wasted all your miles,” he says.

Check a rewards card’s travel
redemption options and airline partners for point transfers and values before
applying for a card.

Settling in
at your new address

3. Food, drink, lightbulbs and household cleaners

Once in your home,
you will have to stock the fridge, the minibar and maybe the new freezer you’ve
powered up in the garage or basement. You may also need lightbulbs that fit your
home’s fixtures, and you may be spending more on household cleaners.

All of this can be
charged to earn more rewards. If you have a cash back card that pays bonus
rewards for groceries, you’re getting some money back with every purchase.

With cash back cards,
Tulbovich says, “The vast majority of people prefer simplicity.”

The best
flat-rate cash back cards
include the Citi
Double Cash
(earning 2 percent back on all spending) and Capital
One Quicksilver Cash Rewards
and Chase
Freedom Unlimited
(both earning 1.5 percent on everything).

Bonus tip: A few rewards cards offer bonus
cash back on grocery purchases
. For example, American
Express Blue Cash Preferred
cardholders earn 6 percent (up to $6,000 in
purchases per year) and shoppers paying with their Blue
Cash Everyday
card earn 3 percent at U.S. supermarkets. 

Making your
house your home

4. Furniture, landscaping, storage for all your stuff

Whether buying a
new bedroom set, planting a flower bed or adding a backyard shed (to store some of your stuff after you downsized), you’ll be spending a couple of
hundred to several hundred dollars.

Open a new cash back card
and you could save $150-$200 or more off your total cost of the furniture,
landscaping or storage shed with the card’s sign-up bonus.

The Capital One Quicksilver
Cash Rewards, for example, will give you a $150 cash bonus if you spend $500 in
the first three months after you’ve opened the card.

In other cases, you might
shop for items for your home while building rewards for a trip months after the
moving and settling in is complete, Tulbovich says.

If travel isn’t on your
horizon, and you’ve got home-related purchases to make, Opperman suggests
considering a credit card from a big-box store such as Home Depot or Lowe’s,
where you may be able to get 0 percent financing for several months.

Just be need to be sure
to pay off your store credit card during that time, or you’ll be paying major
interest fees on the purchase.

Bonus tip: With frequent flyer program shopping portals, you earn extra rewards on every purchase. For example, shop through
the United MileagePlus portal to buy furniture from Macy’s and earn 2 points
for every dollar you charge. Or as a Hilton Honors member, you can shop for that
backyard shed through the Hilton website and earn 2 points for every dollar
spent at Home Depot. 

Dealing
with all that new debt

5. Balance transfers, zero interest, breathing room

A new home can means a ton of
new purchases – many of them unplanned. These can be small and large. For
instance, if you were living in an apartment you didn’t need a lawn mower
(small), or once you’re moved in you might want a taller privacy fence around
the backyard (large).

If you’ve run up home-related
charges on your credit cards, a balance transfer card may buy you some time to pay off your charges.
Balance transfer cards usually include an introductory period of 0 percent interest,
and a few don’t charge a balance transfer fee (typically 3 to 5 percent).

The breathing room of 12
to 21 months of no interest gives you time to pay off your balance before the
introductory period ends and the standard interest rate starts.

“There are certainly
savings to be had if your credit score is good enough to qualify for a balance
transfer credit card,” says Chris Dlugozima,
an education specialist with the nonprofit GreenPath Financial Wellness.

But the cards can create
“an artificial sense of relief that’s not really there,” Dlugozima says. And if
you run up balances on both your existing credit card and your new credit card,
your troubles are compounded.

Thomas Nitzsche, spokesman
for the nonprofit Money Management International, says you need to be sure to
pay off the balance transfer card before the promotional period ends. “Unless
they’re really careful, that can get away from them.”

You don’t want that.

Pay it off earlier, if you can. Set up reminders on your phone of when payments are due. You’ve got this. 





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