Planning a home renovation is an exciting step—whether it’s updating your kitchen, finishing a basement or adding energy-efficient upgrades. But with the rising costs of materials and labor, paying out of pocket isn’t always possible. That’s where financing options come into play. Two common ways homeowners fund renovations are credit cards and Home Equity Lines of Credit (HELOCs). While both are readily available, one is often far more budget-friendly than the other. Let’s break down the differences between credit cards and HELOCs.

Credit Cards: Quick Access, but Higher Costs

Credit cards are appealing because they offer quick and easy access to funds. If you already have an available credit line, you don’t need to apply for new financing. Plus, some cards offer rewards or 0% introductory rates.

However, once that introductory period ends (usually after 6–18 months), the interest rates often skyrocket. According to a recent article from Lending Tree, the average credit card interest rate in America is 24.28%. If you’re unable to pay off your balance quickly, that interest adds up fast—potentially costing you hundreds or thousands more in the long run.

Credit cards are generally best suited for smaller projects or short-term financing needs that you can pay off quickly. For example, if you’re repainting a room or buying a few new appliances and can pay it off within a month or two, a credit card might be a convenient option.

But for more extensive renovations, like remodeling a kitchen or replacing a roof, credit cards aren’t usually the most cost-effective choice.

HELOCs: A Flexible and Affordable Financing Option

A Home Equity Line of Credit (HELOC) allows you to borrow against the equity in your home, usually at a lower interest rate than most credit cards. It functions like a credit card—you’re approved for a maximum credit limit, and you can draw funds as needed during the draw period (typically 5–10 years). You only pay interest on the amount you actually use.

When you open a HELOC with Partner Colorado, you can conveniently access the credit available in your HELOC, at the same low rate of your HELOC with our HELOC Visa^® with Rewards credit card. This let’s you make purchases as you go during a home renovation project. Plus, you’ll earn reward points redeemable for cash back, travel and merchandise.

Here’s why HELOCs are often a smarter option for larger home renovation projects.

Lower Interest
Rates HELOCs usually offer variable rates significantly lower than credit card rates. Even with rate fluctuations, they tend to remain more affordable.

Interest-Only Payments During Draw Period
During the draw period, you may only be required to make interest payments, which keeps your monthly payments lower while you’re completing your renovations.

Flexibility
Like a credit card, you can borrow what you need, when you need it. This can be helpful when projects come with unexpected expenses.

Potential Tax Deductibility
If the HELOC funds are used for qualified home improvements, the interest may be tax-deductible (consult a tax advisor for details). For homeowners looking to tackle larger home renovations, a HELOC can be a smart, cost-effective financing tool. While credit cards may be suitable for smaller, quick-fix projects, the lower interest rates, flexible repayment terms and potential tax benefits of a HELOC offer real advantages.

If you're considering a home improvement project and want to explore your financing options, Partner Colorado can help you evaluate what's best for your situation. Our team is here to guide you through the HELOC process so you can upgrade your home without breaking the bank.