Many homeowners enjoy fixing up their houses to make it more comfortable to live in, as well as increasing the value of the house. However, renovations can be costly, and many feel a bank loan might be the most suitable form of financing home improvements.

Remodelling your home should not drain your savings either. One of the first rules of personal finance is to keep an emergency fund as you never know when you might need it.

Losing a job, needing an expensive car repair, or having unexpected medical bills are just a few scenarios where your emergency fund will be useful. Maintain at least three to six months’ worth of living expenses in your bank account.

Hence, you shouldn’t drain your bank account to pay for home improvements —unless they’re critical damage repairs (such as repairing air conditioning or a roof leak).

Instead, consider staggered or smaller home projects paid with your credit cards. Nowadays, many major credit cards offer zero interest instalments or low-interest easy payment plans (EPP).

Reward credit cards or cash back credit cards is also an option that can provide valuable rewards that you can apply towards your next improvement (or to help cover your other expenses).

Applying for a new credit card could cause a slight but temporary dip in credit scores. However, one must use their card responsibly by making prompt payments and never max out the credit limits. Over the long term, it is the best way to raise your credit scores.

Here’s an example of a smart home project. To save on your electricity bill and maintain a cool interior temperature, you can add solar tinting films to your windows. Charge the cost of this to a rewards credit card that has a 12-month, 0% interest EPP.

The accumulated reward points could be exchanged for a cash voucher to pay for new curtains to dress up your cool windows.
Yes, we do know not many contractors or home improvement companies accept credit card payments, and some credit card issuers only allow certain merchants for EPP.

So what you can do is negotiate to buy the supplies yourself from a retail store and at least earn credit card rewards. You can find home supplies from many online shopping portals as well.

Another way to maximise credit card usage for home projects is to utilise a Balance Conversion Plan or Flexi Payment Plan. Major banks allow selected customers to convert outstanding credit card balance into low interest, affordable monthly instalments.

This can be applied to more than one purchase on the credit card. So, if you have charges from three merchants, you can combine the balance into a flexible payment plan.

Now, here’s an important point to note, and we strongly urge you to remember this. Missed, late or incomplete payments of any particular monthly instalment as per your payment schedule would result in additional debt.

Banks could cancel the 0% interest rate without notice, and you will be charged with average interest rates which could range between 12% to 18% for the entire outstanding balance until you pay it all off.

On top of that, they may also be late payment charges. This puts you in danger of having more debt that you can afford. Using a credit card for big purchases requires discipline. Using EPP will also affect your credit card’s available credit limit.

For example, if you have a credit limit of RM10,000, and you use an EPP to pay for an Ikea kitchen cabinet that costs RM3,300, you will now only have RM6,700. But your credit limit will return to its original amount as you pay off your instalment payments.

While there are many benefits to taking up instalment payment schemes, there are also downsides you’ll need to consider.

Read through the terms and conditions, it may be a bit tedious, but that’s how you will know if there are any hidden costs or deal breakers.
Most home improvement projects are a significant expense, and you should do everything you can to minimise the sting of those costs. With the right combination of savings tactics and rewards earning credit cards, you’ll come out much further ahead in improving both your home and your life.