Buying a new house is an exciting time in anyone’s life, but it can also be a very expensive one. New homeowners often need to put many expenses on their credit cards to cover the cost of furniture, renovations, and other necessary purchases.
With so many credit card options on the market, choosing the right one can be a challenge. Here are some things to consider when selecting a credit card for your new home.
Maximize Rewards
Credit cards offer rewards for nearly any type of purchase, including those for new home expenses. The first step to choosing the best card for your needs is to make a list of your biggest expenses. Look for a card that offers bonus rewards in the largest number of expense categories, such as furniture and utility deposits.
If your expenses don’t fit into any card’s bonus categories, consider a card with a good flat rate on all purchases, such as a 2% cash-back card.
Sign-Up Bonuses
When making big purchases for your new home, consider sign-up bonuses to maximize your rewards. Sign-up bonuses give a lump sum of cash back or points when you meet a set spending requirement in a certain amount of time.
Buying a new house can involve fairly large purchases, making it easier to meet a big bonus requirement. Focus on cash-back bonuses for an easy way to recoup expenses or consider a travel rewards card with a nice bonus for a future vacation.
Interest-Free Intro Offers
A long 0% APR offer can be the most useful way to save money as a new homeowner. Carrying a balance on a credit card means paying high interest fees, which can get expensive quickly. Intro 0% APR offers give a 0% interest rate for a set period of time, such as 12 months. These offers let you pay off purchases over time without accruing any interest fees.
Read the Fine Print
When choosing a credit card, always read the fine print. Regular 0% APR cards only charge interest on the balance once the promo period ends. However, store credit cards can use deferred interest financing, which charges interest on the entire balance if not paid in full before the promo period ends. Use deferred interest financing only if you are certain of paying off the full amount before the promo period ends.
Avoid Opening New Credit Cards
It’s important to avoid opening new credit cards while still in the home-buying process. Big changes to your credit profile can negatively impact home financing. It is recommended to avoid opening any new credit cards for six months before buying a house. Taking on a huge debt during the home-buying process will likely impact credit scores. New debt will also dictate how much money there is to pay off other debts. Both factors will influence a credit card issuer’s decision on whether to approve an application and the credit limit to grant.
When choosing a credit card for your new home, it’s important to balance your specific needs. Rewards are important, but don’t overlook interest-free intro offers. Look for a card that offers bonus rewards in the largest number of expense categories. Consider sign-up bonuses to maximize rewards, especially for large purchases that won’t fit into a bonus category. Read the fine print and avoid opening new credit cards while still in the home-buying process. With careful consideration, you can find the best credit card for your new home and save money in the process.
