Smart Borrower Blog

1/3 of Americans Use Credit Cards for Home Renovations

Oct 26th, 2018 @ 3:38 PM by Amber Nelson

Even though Americans now have more home equity collectively than ever before, very few are tapping into that equity to pay for their home renovations, with more than a third charging their home expenses to a credit card. According to a study conducted by web site Houzz and Synchrony Financial, 36.4% of all renovation purchases in 2017 were made with cards, an increase from 29.5% in 2016. The share of card-based home improvement purchases have increased for the past six straight years.

Most homeowners paid with cash or savings according to the survey and only 15% used a home equity loan, a much lower share than in the past. Home equity loans are second mortgage loans tied to the value of your home. There are variations like the home equity line of credit (HELOC) that allows borrowers to pull money out as needed and make payments only on the borrowed sum. Home equity loans were used heavily during the housing boom leading up to the Great Recession, with borrowers over-leveraging themselves and leaving themselves vulnerable to negative equity, default and foreclosure when the market crashed.

Perhaps that is why today’s trend of spending with cash and credit is led by millennials. They watched their parents suffer the market effects and are probably wary of making the same mistakes even if the market is different now. The stats show that 41% of millennial home owners (those aged 25-34) paid for major renovations with credit cards compared with just 30% of those over age 55.

And most of those who paid by card used them for the ease of access to credit, not simply for the credit card rewards. The majority of respondents cited “quicker access to fund” as the main reason for using cards while only 38% said “better rewards” were their motivation.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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