Riding the Rate Wave: Home Buying and Credit Card Rewards

The recent dip in mortgage rates, as reported by NerdWallet, is welcome news for prospective homebuyers. While RewardSmart doesn't offer mortgage advice, we do specialize in maximizing your credit card rewards. And buying a home involves a lot more than just the mortgage itself. From the initial deposit to the final touches on your decor, there are numerous opportunities to leverage your credit cards and rack up valuable points, miles, or cashback.

Maximizing Rewards During the Home Buying Process

Here's how to strategically use your credit cards to maximize rewards during each stage of the home buying process:

  • Earnest Money Deposit: While many sellers prefer a cashier's check, see if you can negotiate a small portion of the deposit on a credit card. Even a few hundred dollars can translate into a nice bonus if you're meeting a minimum spend requirement on a new card.
  • Moving Expenses: Moving can be expensive! Whether you're hiring movers, renting a truck, or purchasing packing supplies, put these expenses on a credit card that offers bonus rewards on travel or general purchases. Look for cards that offer 2x or 3x points per dollar spent. For instance, a card offering 2x points on travel could be ideal if you're moving long distance and incurring transportation costs.
  • Home Improvement and Furnishings: This is where you can really maximize your rewards. New furniture, appliances, paint, and other home improvement items can easily add up to thousands of dollars. Use a credit card that offers bonus rewards at home improvement stores like Lowe's or Home Depot. Some cards even offer rotating bonus categories that might include home improvement during certain months. If you have a major renovation planned, consider applying for a new credit card with a large sign-up bonus and use the renovation expenses to meet the minimum spending requirement. A card that offers a $200 bonus after spending $1,000 in the first three months could be a great option.
  • Utilities and Services: Don't forget to put your new utility bills and internet/cable services on a rewards credit card. While the rewards may be smaller, they add up over time. Many cards offer bonus rewards on recurring bills.

Choosing the Right Credit Card for the Job

Before you start swiping, take some time to evaluate your credit card options. Consider factors such as:

  • Sign-up bonuses: Are you eligible for a new card with a lucrative sign-up bonus?
  • Bonus categories: Does your card offer bonus rewards on the types of purchases you'll be making?
  • APR: If you plan to carry a balance, make sure you have a card with a low APR.
  • Redemption options: How do you prefer to redeem your rewards? (Cashback, travel, gift cards, etc.)

A Word of Caution

While earning rewards is a great perk, it's crucial to use credit cards responsibly. Always pay your bills on time and in full to avoid interest charges. The goal is to earn rewards, not to pay for them in interest.

RewardSmart Recommendation

With mortgage rates showing positive movement, now is a great time to review your credit card strategy and plan how to maximize rewards on all the expenses associated with buying a home. Don't leave money on the table! Use the RewardSmart app to compare cards, track your spending, and redeem your rewards effectively. Good luck with your home purchase!