Editorial Policy

How to Leverage Remodeling Costs into Credit Card Rewards

Allie Johnson

August 7, 2013

Soon, my husband and I will start a big house remodeling project. We are going to turn the cramped kitchenette in our little Victorian house/former bed and breakfast into a real kitchen. So, I’ve been doing some research on how to leverage our spending to earn maximum airline miles.

Listening to hammering and sawing (and dealing with freaked-out dogs) for a month will wear on our nerves, so I’m hoping to rack up enough miles to allow us to fly off on a relaxing weekend trip after the dust settles.

We recently made a decision to stop using our rewards card for all of our regular expenses because we found that we were spending more than when we used cash or debit — but we made an exception for big purchases such as this remodel. For one thing, we want the consumer protections that come with using a credit card. Also, we already have a set budget and money in the bank, so we’re less worried about overspending. And it is appealing to get a prize back for shelling out that much money.

A remodel is a great opportunity to earn rewards, but it can present some challenges. If you’re also planning a home renovation or project, here are five tips to help you maximize the miles or points you earn:

1. Ask if your contractor takes credit cards. If your contractor takes credit cards and doesn’t charge you extra to pay with plastic, you’re in luck. In our case, our contractor doesn’t take cards but the plumber and electrician — whom we’ll pay directly — do. We can use credit cards to pay them without incurring a “convenience fee” that would cancel out our rewards. Although we were out of luck with our contractor, more of them are accepting credit cards than in the past, according to consumer review service Angie’s List.

2. If your contractor doesn’t take plastic, look for a workaround. As a workaround, we’re considering getting an American Express Bluebird card to pay our primary contractor. The card is reloadable  and can function like a checking account, recommended by ThePointsGuy.com. That way, we would be able to use our rewards card to buy Vanilla Reloads (to load money onto the card) and then write a check from the account to the contractor. As travel rewards site TravelSort.com points out, using AmEx Bluebird checks works well not just for paying your rent or utilities, but also to pay your contractor for a house remodel. Just keep in mind that some retailers no longer accept credit cards (or limit the amount you can reload with a credit card) for Vanilla reloads.

3. Buy your own supplies. Don’t let your contractor buy pricey supplies and invoice you. Instead, arrange to purchase your kitchen cabinets, countertops, drywall and other items with a rewards card. That way, you can hunt for the best deal and choose purchases that will get you the most points or miles. The blogger Frugal Babe saved $200 by opening a Home Depot store card and getting 10 percent off of the first $2,000 of her initial purchase. We plan to look into that option, as well as the possibility of getting a Home Depot coupon that can be used toward our purchase of cabinets and other materials.

4. Consider gift cards. Blogger Jenny Lang of FrugalGuruGuide.com used discount gift cards to make her remodel pay off. She has a Discover card that pays 1 percent cash back on every purchase, and she can redeem it as cash or as a Lowe’s gift card. A $50 card cost her only $45 through the Discover redemption program.

5. Pay attention to categories. It might make sense to consider the timing of your remodel if you have a card that gives higher rewards percentages in ever-changing categories. In fact, FrugalGuruGuide.com points out that Discover and other cards sometimes offer 5 percent cash back for home improvement spending. Just beware of spending caps: Discover offers this percentage only on the first $1,500 spent.

6. Save wherever you can. Remember, look for discounts and deals wherever you can find them to cut the overall cost of your remodel, and be just as frugal as if you were spending cash. Spending more just to get points is always a bad idea because you earn only a tiny fraction of that money back. If you save that money and bank it instead, you’ll have more spending money for your free trip.