No one likes to cut a budget, especially when it’s his or her own. But when it comes to planning a home remodeling project, homeowners must establish a realistic budget, and actively manage it. Preparing for a remodeling project is a lot like preparing to buy a car. You may know the room and style you want, but the options you choose may drive the price higher than you can reasonably afford. But there are ways to stretch the remodeling budget and end up with stylish results within budget.
One way is by using “plastic” to pay for your remodeling project. Orange County remodeling contractors say many wealthy clients have been putting renovation costs on their credit cards. And it’s not just for small jobs, but for renovations that run north of $100,000.
This is all a way for people to increase their credit card reward points which can be used for things such as basic purchases to VIP packages. Being that they are already going to pay for the custom home remodeling, homeowners want an extra perk they can’t get with cash.
Greg Cave says he has put over $1 million on his American Express (US:AXP) card over the past four years to pay for a kitchen remodel, landscaping and a customized lighting system for his home in Parker, Texas. Cave, a 48-year-old owner of a computer-consulting firm, says he pays credit-card balances in full every month while earning points, which he and his partner have redeemed for trips. Earlier this month they took a week long vacation in St. Thomas that was paid for by some of those points. “If I’m just going to write a check at the end of the month, why not get those extra points?”
Indeed, people who make major credit-card purchases can earn elite-level perks. The rewards vary by issuer but include yacht cruises with views of the America’s Cup sailing race, four-night packages to the Sundance Film Festival in Utah, and access to private events with athletes, designers and celebrity chefs. Or, depending on the card, they can earn cash back at a rate-often 1% to 2% of their total purchases, which is higher than what many bank deposit accounts offer.
Funding expensive home improvements make it simple to accumulate points quickly. For 2012, it is estimated that homeowners will spend approximately $120.7 billion on home improvements, which is an increase over last year and the highest amount since 2007 based on information provided by the Joint Center for Housing Studies of Harvard University. Based on information from the National Association of Remodeling Industry, most customers will write a check to pay for the work, but credit cards are the next most popular method of payment, about 28% of companies report that credit cards are used to fund services or materials provided.
Credit cards are the top choice of payment for customers who are renovating their high-priced homes, according to Mel Orellana, VP of financial operations at Prime Home Improvements, a renovation company located in White Plains, New York. Increased business is happening at specialty firms as well. Darren Kammer, president of DK Automation of Plano, Texas, a company which specializes in systems that control home lighting, says that credit-card payments have become more routine over the past year.
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Author: John AdamsThis author has published 1 articles so far.