How Homeowners Are Using Credit Cards to Pay for Home Improvement
Learn about this rising trend in the home improvement and remodeling industry with research from Houzz and Synchrony
Consumers charged $141 billion in home improvement spending on their credit cards in 2017, a powerful indication that this payment method is now a significant force in our industry. Given that 20 percent of that spend — about $28 billion — was for paying home professionals, it’s a good idea to understand the latest facts on how homeowners are using credit cards in renovation projects.
Most Homeowners Who Use Credit Cards Take Advantage of Promotions
If everyone paying for home renovations through credit cards was going into high-interest credit card debt, this might not be great news for the industry (or for homeowners). But it turns out that the majority of homeowners who use credit cards to pay for renovations take advantage of promotional offers, joint research from Houzz and Synchrony shows. Fifty-eight percent of those using cards attain promotional no interest, while 16 percent get promotional low interest rates.
Even those who use credit cards with standard interest rates (12 to 18 percent) may be taking advantage of offers for mileage or other reward points. Sitchinava says she personally paid for a three-week vacation to Europe for her family with points earned by using credit card(s) to pay for her home renovation.
If everyone paying for home renovations through credit cards was going into high-interest credit card debt, this might not be great news for the industry (or for homeowners). But it turns out that the majority of homeowners who use credit cards to pay for renovations take advantage of promotional offers, joint research from Houzz and Synchrony shows. Fifty-eight percent of those using cards attain promotional no interest, while 16 percent get promotional low interest rates.
Even those who use credit cards with standard interest rates (12 to 18 percent) may be taking advantage of offers for mileage or other reward points. Sitchinava says she personally paid for a three-week vacation to Europe for her family with points earned by using credit card(s) to pay for her home renovation.
Younger Homeowners Are Most Likely to Use Credit Cards to Pay for Renovations
All ages are using credit cards to pay for renovations, but the trend is strongest among younger homeowners. One in 4 millennials (ages 25 to 34) use credit cards as part of a renovation payment strategy. By contrast, 22 percent of Gen Xers (ages 34 to 54) and 15 percent of baby boomers (ages 55 and older) use credit cards to pay for renovations, research from Houzz and Synchrony Bank shows.
“Younger generations are increasingly looking at credit cards sort of interchangeably to cash,” Sitchinava says.
All ages are using credit cards to pay for renovations, but the trend is strongest among younger homeowners. One in 4 millennials (ages 25 to 34) use credit cards as part of a renovation payment strategy. By contrast, 22 percent of Gen Xers (ages 34 to 54) and 15 percent of baby boomers (ages 55 and older) use credit cards to pay for renovations, research from Houzz and Synchrony Bank shows.
“Younger generations are increasingly looking at credit cards sort of interchangeably to cash,” Sitchinava says.
All this data raises a question for professionals: Should you incorporate credit cards as part of your financing strategy for customers? One option is to accept credit card payments. Alternatively, pros might consider offering financing to homeowners themselves.
Watch now: Click to watch the full webinar
Tell us: Have you incorporated credit card payments as part of your design or construction business? If so, please tell us how it’s working out for you in the Comments.
More for Pros on Houzz
Designing a Business: How Do I Deal With Client Sticker Shock?
Read more about how homeowners are paying for their remodeling projects
Watch now: Click to watch the full webinar
Tell us: Have you incorporated credit card payments as part of your design or construction business? If so, please tell us how it’s working out for you in the Comments.
More for Pros on Houzz
Designing a Business: How Do I Deal With Client Sticker Shock?
Read more about how homeowners are paying for their remodeling projects
Credit Card Usage Is on the Rise
The overwhelming majority (85 percent) of renovating homeowners today still use cash to pay for home renovations. “Cash is king. It has been historically. That is not changing,” Sitchinava says. “What is changing is that over time we’ve been seeing a larger and larger share of homeowners leveraging credit cards.”
In 2011, 29.5 percent of consumer spend on home improvement was charged to credit cards. In 2017, that share jumped to 36.4 percent. “Given how large our industry is and how slow to see any trends or any changes, a 6 percentage point penetration change in six years is a pretty dramatic change,” Sitchinava says.