After surviving the ups and downs that inevitably come with a major renovation, you deserve a vacation. But how can you afford one after blowing your budget on the kitchen of your dreams? Here's one strategy: Pay for all those appliances, cabinets and other big-ticket items with a credit card that earns rewards.
But first, let's be clear: No one is advocating charging a home renovation to a credit card unless you have the wherewithal to pay it off. Credit cards are an expensive way to borrow money. And racking up high-interest debt you can't afford is a recipe for disaster.
Having said that, with a little planning - and the cash on hand to pay off the balance so you don't incur interest charges - using a credit card to make big-ticket purchases could turn your renovation spending into a free vacation.
That is how Jon and Jaimie Clark ended up on the beach in the Seychelles followed by a 10-day safari in Kenya earlier this year. With the assistance of Juicy Miles, a company that helps people figure out how to earn miles and points for free trips, the couple tactically spent about $40,000 on kitchen appliances, tile, bathroom supplies and other home improvements using new American Express Platinum Delta SkyMiles and Chase Sapphire Reserve cards. The points they earned - roughly 250,000, including sign-up bonuses - paid for first-class tickets to the Seychelles, three-nights in a private bungalow and nonstop flights to Nairobi for the safari, which Jon Clark had received as compensation from a client.
"In scenarios where you're already going to spend that money, you might as well get something in return," said Clark, who owns a digital marketing agency in New York. (His wife, Jaimie Clark, works for The Wirecutter, a New York Times company.) "The only thing we didn't buy on the card was the cost of the contractor, who required check or cash payments."
If that sounds appealing, here are some strategies to obtain a free vacation through your home renovation spending - or, at least, to offset your costs.
» Look for cards with sign-up bonuses. "One of the easiest ways to earn a lot of miles and points is with a new credit card," said Lee Huffman, who has a travel blog called BaldThoughts (Huffman is bald) and runs a travel consulting service.
New cards often require spending several thousands of dollars to earn the bonus. The Southwest Rapid Rewards Premier card, for example, offers 50,000 points for spending $4,000 within 90 days of opening an account. "With the purchase of a new appliance or paying for home repairs, meeting these requirements can be fairly simple," Huffman said.
Last year, Ken Helman, a musician and an educator who has worked with Sting, among other artists, completed a $150,000 gut renovation of a three-bedroom house he rents through Airbnb in Puna, Hawaii. Helman overhauled the kitchen and bathrooms, raised the ceiling height in the living room, added an outdoor lanai and splurged on Karndean flooring and lighting fixtures from Lumens and Design Within Reach. To accumulate points and miles, he used a combination of credit cards, including the American Express Platinum card, the Hawaiian Airlines Mastercard and the IHG Rewards Club Mastercard.
"All came with hefty sign-up bonuses," said Helman, who worked with Juicy Miles to help maximize his renovation spending to earn points and miles. "I just said to myself, 'I'm doing all this shopping' - not only for furniture and stuff, I was also buying wood and fixtures and tile - 'why not spend the money with these cards, paying them off each month so there was no interest?'"
Earlier this year, he cashed in some of those points to fly business class to Berlin, Croatia and Venice for his 65th birthday. In Venice, he celebrated by seeing the opera "Don Giovanni" at Teatro La Fenice.
And he still has plenty of remaining miles. "I can continue to travel with what I accrued," he said, "for quite some time."
» Shop airline mall sites. Buy bathroom fixtures and kitchen appliances using online airline portals like United MileagePlus Shopping and American Airlines eShopping, which link to home-improvement retailers like Home Depot and Build.com, offering frequent-flyer members miles for what you spend.
Many of the credit-card companies also have shopping portals, said Adam Morvitz, chief executive of Juicy Miles, "where you can earn tons of additional points at your favorite home-renovation retailers."
If you are a Chase cardholder, for example, and you click "Shop Through Chase" when you are logged on to the bank's site, he said, you can earn twice the usual points from Lowe's and three times the points from Ace Hardware. To find out which portals are offering the largest payouts when you are ready to buy, check out cashbackmonitor.com.
That's how Tiffany Funk ended up with enough miles to fly first-class to Asia, after buying a bunch of doorknobs while renovating a midcentury-style four-bedroom with her husband in Spokane, Washington, last year. "None of the doorknobs in the house matched, and those can be surprisingly expensive," said Funk, the managing editor for the website One Mile at a Time.
By buying them in several transactions, when the airline shopping sites were offering back-to-school bonuses, she said, "the doorknobs alone earned enough miles for a one-way first-class ticket to Asia."
» Check your junk mail. "Some credit cards offer bonus points or cash back depending on how and where you shop for your kitchen or bathroom appliances," said Brian Kelly, founder of The Points Guy, a travel and lifestyle site for the mileage-obsessed.
Through March, he said, you can activate a bonus on the Discover It Card to earn 5 percent cash back on online purchases at wholesale clubs like Sam's Club or Costco. And the Chase Freedom card will get you 5 points for every dollar spent when you pay using a digital wallet like Chase Pay, Apple Pay, Samsung Pay or Android Pay this month.
"I always check Amex offers to see where I can save $100 to $250 on purchases and any bonus points I can earn," said Jonathan Wizman, a real-estate agent in Los Angeles who specializes in high-end house flips. Since the homes' developers reimburse him for his purchases, using a credit card that earns points or miles is a no-brainer. Outfitting a four-bedroom house in Los Angeles, now listed for nearly $4 million, he racked up enough points and miles buying things like cabinetry, lighting and Miele kitchen appliances to take a three-week, multicountry vacation over New Year's, with stops in the United Arab Emirates, Egypt, the Maldives, Singapore, Bali and Thailand.
With so many miles to burn, Wizman frequently vacations in Hawaii. "You just get to travel the world," he said. "Any time I ever have a break, it's always free."
» Opt for cash back. Last September, Jon and Ben Nickel-D'Andrea bought a 1926 three-bedroom Craftsman in Seattle that needed a new water heater, kitchen appliances and other updates. To get cash back on their purchases, the couple used a Discover card offering 1 percent cash on purchases now, plus an additional 1 percent at the end of the year, and no interest for 15 months.
"With 15 months of zero-percent interest, it's easy to set a plan to pay it off," said Jon Nickel-D'Andrea, estimating that if they put a total of $20,000 on the card for renovation expenses, they would need to set aside $312 a week to pay it off. "That's about $45 a day."
That move, combined with the card's end-of-year bonuses, has earned the couple more than $2,000 in cash, which they parlayed into gift cards at West Elm, earning even more savings. "For every $45 in cash-back bonus, you got a $50 gift card," said Jon Nickel-D'Andrea, who writes about flying first class with his husband, Ben, at No Mas Coach!, part of the BoardingArea blogger network. "That's another 10 percent in free stuff."
They also took advantage of West Elm's loyalty program offering 3 percent cash back on purchases, plus a holiday bonus that earned 10 percent cash back on purchases, which they parlayed into more gift cards. In all, the couple paid around $5,230 out of pocket for about $8,638 in furniture, including a bed, dresser, nightstand, dining table, chairs, three chandeliers, bar and console - saving some $3,400.