Americans are sitting on by far the most home equity of all time, however their desire not to use what seems like a clear resource, particularly for big-ticket things such as home renovations, has befuddled housing analysts for months. Could this be the biggest mistake you ever make?
Biggest Mistake -Paying For Renovations with Credit Cards
A new study suggests there’s more to it than only aversion to debt or even the tedious credit-qualification process: Americans are increasingly opting to fund renovations with credit cards.
Some 36.4% of renovation spending in 2017 was done with cards, in accordance with the study, conducted by home improvement web site Houzz and Synchrony Financial. That’s a rise of nearly one-quarter from the 29.5% share credit cards held in 2011, an amount that has increased every year since.
The majority – 85% – of survey respondents said they used cash/savings to fund renovations. That was followed by 33% saying they used credit cards. Only 15% said they used a secured home loan – less than 50 % the number who had charged projects.
Just like lots of other trends, it’s millennials who are driving it. Among homeowners aged 25 to 34, 41% paid with credit cards, while only 30% of those aged 55 and older did so.
Younger homeowners are also more prone to pay balances with time – 60-65% say that’s their plan – than are those 55 and up, of whom 49% expect to keep balances. Needlessly to say, among all homeowners who intend to keep balances, 74% are utilizing a promotional card with low or no interest.
What could possibly be more surprising is that people who use cards for these large transactions aren’t focused on rewards. Among the top reasons owners gave for utilizing a credit card instead of other financing methods, “quicker access to funds” was the most significant, at 38%, while “better rewards” only accounted for 25%.
Have a questions or concern? Nick, Cindy & Nicholas Davis with RE/MAX Premier Group are here to assist you with all your Real Estate Needs. We are always available at 813-300-7116 to answer your questions or you can simply click here and we will be in touch with you shortly.
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