Should I pay for home improvements with a credit card?
Home improvements can involve things such as:
- insulating your home
- building an extension
- installing a new boiler
- installing double glazed windows
- a loft conversion.
These things could help bring down the cost of your energy bills and increase the value of your home in the future.
If you decide you want to pay for your home improvements on a credit card, you should be confident that you’ll at least be able to afford the minimum repayment every month.
This is because if you don’t make the minimum repayment, you could damage your credit history, making it more difficult to borrow in the future. You’ll also unnecessarily increase the amount of debt that you’ll accrue, which will make it more difficult to pay off altogether.
Benefits of paying for home improvements on a credit card
If you choose to pay on a credit card, one advantage is that you’ll be able to spread the cost into more affordable monthly payments.
If you do this, you should always try to pay off as much as you possibly can each month to keep the interest you’re charged at a minimum.
It also means that you can get started on home improvements straight away if you don’t have any savings. Another benefit of paying on credit is that if you spend over £100, your payment could be protected by Section 75 of the Consumer Credit Act.
What is Section 75?
Section 75 provides extra protection for transactions made on a credit card between £100 and £30,000. This means your credit card company is liable for the cost of your purchases. Basically, if you don’t get what you pay for, you’re covered. This can include purchases that:
- are faulty or incomplete
- arrived damaged or broken
- did not turn up at all.
For example, if you paid for double glazed windows, but the company you ordered from went bust and didn’t provide you with a refund, then the credit card company would be liable for this.
Exceptions to the Section 75 rule
If you’re planning to pay on a credit card, there are a couple of exceptions to the Section 75 rule you should be aware of.
Mainly, a purchase needs to be at least £100 to be covered by Section 75. So, if two windows only cost £100 altogether and one arrived broken, then you wouldn’t be able to claim back money for this from the credit card company.
Another exception would be that. if you used the card indirectly, such as through Paypal or a travel agent, then you wouldn’t be covered this way either. You need to make a direct payment to a retailer to be covered.
Being mindful of your spending on a credit card
When it comes to spending on a credit card, you should try to be mindful of the amount you’re putting down. It can be tempting to spend more than you can afford, however, this can lead to a lot of debt that can be difficult to get out of.
If you have a lot of work that you want to do to your home now, but you can’t afford all of it, you should hold off until you’ve saved up a bit more. You can still make improvements in smaller chunks so that your repayments are affordable.
You should also remember to compare prices when looking into home improvements as you may be able to find cheaper deals if you shop around.
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Intelligent Lending Ltd (credit broker). Capital One is the exclusive lender.