Home Depot Financing: What You Should Know
Got the itch to transform your space into something out of a design magazine? Before you grab your tool belt, be forewarned: DIY home improvement projects can quickly add up. Luckily, you have a variety of options to finance your Home Depot purchase, from store-branded credit cards and project loans to alternatives such as home equity lines of credit or a personal loan from your bank.
If you’re planning to spruce up your backyard or give your home a makeover, keep reading for Home Depot financing options.
The Home Depot Consumer Credit Card
If you already shop at Home Depot frequently, the co-branded The Home Depot Consumer Credit Card issued by Citibank could be a good financing option.
While this type of store credit card cannot be used at other retailers, you could get up to 12 months of deferred-interest financing during special promotional periods. As of this writing, Home Depot also offers up to $100 off a purchase in the first month of having this card, plus 12 months of hassle-free returns. If you decide to apply, you can check whether you prequalify on the Home Depot website without impacting your credit score.
This card has no annual fee and is not affiliated with any rewards or loyalty programs. After the promotional intro period, pay off your card in full each month to avoid the card’s high interest.
Key features of the Home Depot Consumer Credit Card:
- 17.99%-29.99% variable APR
- Intro period of zero-interest financing on qualifying purchases over $299
- Interest charged retroactively from the purchase date if balance is not paid in full during zero-interest periods
- No annual fee
- Free returns for one year of any items purchased with this card
Home Depot Project Loan
The Home Depot Project Loan can be a great financing option for borrowers with relatively good credit and who need access to higher amounts of cash. If you’re tackling a large home improvement project and you plan to make the majority of your purchases at Home Depot, the Project Loan could be a very affordable option compared to the Consumer Credit Card.
With a borrowing limit of up to $55,000 and a fixed annual percentage rate (APR) as low as 7.42%, the Project Loan offers a six-month spending term to purchase everything you need for your project. Monthly payments are fixed at $20 or less for every $1,000 spent and can be paid off in installments over 66 to 144 months.
There are no prepayment penalties, so you can make additional payments or pay off the entire balance in full to save on interest. Make sure to check that Home Depot has everything you need before you apply, because your financing will be restricted to purchases from this retailer.
Key features of the Home Depot Project Loan:
- 7.42% to 19.96% fixed APR
- Borrowing limit up to $55,000
- Repayment period of 66 to 144 months
- No down payment, annual fee or prepayment penalties
- Monthly payments of $20 or less
Home Depot Pro Xtra Credit Card
The Home Depot Pro Xtra Credit Card is tailored for professional contractors who frequent Home Depot for their business needs. Linked to Home Depot’s rewards program, Pro Xtra, this credit card offers unique discounts and benefits, including the ability to earn rewards at an accelerated rate. For every dollar spent with the card, users earn $4 toward ProXtra Perks, which can be redeemed for tool rentals, qualifying merchandise and services in store.
The card also allows authorized employees to make company purchases at any Home Depot store location, making it convenient for businesses with multiple employees. It offers online business tools such as receipt storage, quote creation and the ability to hire skilled labor.
Home Depot Commercial Account
Although a Home Depot Commercial Account is not a credit card, authorized users can use this product to charge purchases on behalf of their business. Commercial Account cardmembers receive a 2% early pay discount for paying online invoices within 20 days; otherwise, companies have 60 days to pay for purchases made with this option.
Home Depot financing alternatives
There’s no shortage of financing options, but the best one for you will depend on your financial situation and purchasing needs. If you have strong credit and prefer the flexibility of shopping at other stores, it could be worth considering alternative financing, such as a zero-interest credit card or personal loan.
Personal loans
Personal loans are a lump sum of money you can use for almost any expense, including home renovations. They are paid off in fixed monthly installments and can be secured loans (requiring collateral) or unsecured loans (not requiring collateral).
When you’re considering a personal loan, shop around and compare rates and fees from different lenders. If you have excellent credit, you could qualify for a low APR. However, if your credit score is lower, you might end up with a much higher rate, which could make the loan more expensive over time.
LendingTree data shows that the average APR for closed personal loans on LendingTree for borrowers with excellent credit in the fourth quarter of 2023 was 16.01%.
0% intro APR credit cards
For some people, the Home Depot credit card can be a convenient choice because it’s easy to use at the store. But if you qualify for it, a 0% APR credit card might be a more affordable option with no interest on purchases for at least the first year. This gives you more time to pay off your debt over time without incurring penalties or extra fees.
Once the introductory period ends, your outstanding balance will accrue interest based on the card’s regular APR. This rate may be lower than what a Home Depot card offers but higher than an alternate method of financing such as a loan product. The average APR offered across all new credit cards in April 2024 was 24.66%, according to LendingTree data.
While the Home Depot card does occasionally feature introductory zero-interest offers, it may be restricted to purchases over a certain amount or shorter periods of time.
Home equity loan or home equity line of credit (HELOC)
A home equity line of credit (HELOC) offers similar flexibility to a credit card in terms of where you can use it and what you can purchase, but at lower interest rates because it’s secured to your home. Think of it as your renovation lifeline, allowing you to tap into your home equity for big-ticket purchases at Home Depot without draining your savings account.
With a typical borrowing limit of up to 85% of your home’s value minus what you still owe, a HELOC can offer substantial financing. However, securing a HELOC isn’t a walk in the park; lenders assess factors like your credit score, employment history and monthly debts to determine your eligibility, and generally offer the lowest rates only to borrowers with credit scores of 740 or higher.
Saving up for a purchase
Saving up for a big purchase by sticking to a budget may seem old fashioned in today’s world of instant gratification, but it remains a tried-and-true financing method. Saving involves setting aside a portion of your income over time, until you’ve amassed enough funds to cover the cost of what you desire. You’ll avoid accruing debt or paying interest, putting you in a stronger financial position in the long run.
To use this financing option for Home Depot purchases, identify your desired items and set a realistic savings goal. Determine how much you need to save each month. Consider automating your savings with automatic transfers from your checking account to a designated savings account dedicated to your Home Depot fund.
By staying disciplined and sticking to your savings plan, you’ll soon find yourself with the funds needed to finance your Home Depot shopping spree, but without the stress of debt weighing you down.