How Not to Use Your Plastic (Credit Card) for Home Improvement

closeup of a credit card

Finding a home improvement contractor in Missouri who accepts credit card payment is a privilege. Plastic can offer the benefits of loaning funds from a lender and using cash. Your Visa, MasterCard, Discover, or Amex let to cover your project’s expenses immediately without paying anything extra. In addition, it can help increase your credit scores and access more favorable borrowing opportunities in the future.

To enjoy the good minus the bad, you have to make a series of sound decisions. For starters, avoid the following mistakes when buying vinyl windows, aluminum gutters, or BIBS insulation in Kansas City:

Failing to Ask for a Higher Credit Limit

A large purchase can significantly increase your credit utilization, a factor that matters a lot in major credit scoring models such as FICO and VantageScore. Ideally, your usage should just be 30% of your credit limit. Anything above that number may tag you as a risky borrower.

A clever strategy to keep your overall credit utilization from going through the roof is requesting a credit limit increase. It allows you to buy more without hurting your credit scores too much.

More often than not, your credit card issuer will have no reason to deny your demand if your credit is good, you have recently gotten a raise, and you are not travelling overseas soon. But then again, you should not reach out to all of your credit card providers. A request triggers a hard inquiry, which will be added to your file. Too many inquiries are a cause for concern for all creditors. It is better to ask for a higher credit limit ahead of your home project because it is always to request for it when you do not need it the additional buying power yet.

Borrowing More Than You Can Repay on Time

Most credit cards come with a grace period. This window allows you to make purchases without paying for interest. However, when you fail to foot the bill on or before the due date, you are likely to shoulder hefty extra charges. Before you swipe, make sure you have the funds available to cover the full balance within the grace period. If you pay your project at a strategic date, you can have plenty of time to deal with this large expense.

someone paying through credit card

Ignoring a 0%-Interest Special

If you received a 0%-interest offer with a long payout period, take advantage of it. It is a personal loan, except that it comes with no extra charge as long as you follow its conditions.

Withdrawing Cash from an ATM

Applying for a cash advance instead of using your plastic outright is more financially impactful. A loan offered by your credit card issuer, a cash advance comes with high interest that accrues right away as well as additional fees charged by the financial institution that processes the transaction.

A credit card can help you realize your dream home improvement, but it may put you in dire straits if you misuse it. Understand how your plastic works and what opportunities it presents you to use it to good effect.

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