The Home Depot is one of the nation’s largest retailers and currently accepts all major credit card from the four major networks – Visa, Mastercard, Discover and American Express, but they also have their own Home Depot-branded store credit card issued through Citi that can only be used at Home Depot Superstores and on their website.
Surprisingly, Home Depot’s consumer credit card has no rewards earning component for Home Depot purchases. This is a truly disappointing to say the least since most co-branded cards have some type of basic cash back or points incentive. Otherwise, what is the point for most consumers? Home Depot certainly enjoys brand loyalty among consumers and their rivalry with Lowe’s is something like that between Coke and Pepsi but showing their customers no rewards in exchange for their patronage seems like a bad move. Just look at the big box stores like Costco (with whom Citi also issues a co-branded card) that offer a compelling array of cash back benefits as a point of comparison. Plus, that card can be used anywhere that accepts credit cards and sill earn cash back rewards.
Which types of cards does Home Depot offer?
Home Depot actually offers two different types of card – a consumer credit card and a project loan card, though neither is a general use credit card that can be used outside of Home Depot stores.
The Home Depot Consumer Credit Card
The Home Depot Consumer Credit Card can be used at Home Depot and HomeDepot.com and charges no annual fee. As mentioned above, Home Depot’s store card doesn’t give you rewards or even discounts for HD purchases. Its primary benefit revolves around what is known as “deferred interest” on purchases of $299 or more. However, it is very important to fully appreciate what deferred interest really means and what it doesn’t mean. What it doesn’t mean is that any interest charges are being waived. Instead, interest payments are simply just being delayed to a later date. If you pay off your balance before the deferral date then you don’t owe any interest – which is a nice thing. However, the big caveat is that if you don’t pay off your entire balance by the end of that grace period, you will end up owing a tone of interest on the entire purchase, all the way back to the original purchase date. Ouch. Stores and card issuers know this type of set up catches a lot of people even though it sounds like a great deal, so buyer beware.
In addition to the standard deferred interest feature there are also occasional deferred-interest promotions of 12 and 24 months involving category purchases like major appliances, lumber/fencing, windows and doors, etc.
Cardholders have to pay a pretty high APR (17.99-26.99%) when they fail to pay off their balance before the end of the deferral period but they at least get a full 12 months for returns, compared with three months for non-cardholders.
The Home Depot Project Loan Card
The loan card isn’t technically a credit card but rather a piece of plastic tied to the Home Depot project loan program. So, it’s basically like a line of credit with a card as the access method vs. a check. The store offers loans up to $55,000 for major projects for major home renovations like kitchen and bath remodeling. Consumers can tap into their line of credit with the Mastercard-branded card that can be used in or outside of Home Depot stores.
The loan card is “open” for a six-month window during which time you can spend any or all of the money in the loan but luckily you only get charged interest on the funds used and not the entire balance. After the six-month usage window is closed, you have 84 months (seven years) to pay off the balance.
Does it make sense for most people?
There are possible scenarios where Home Depot’s credit card might make sense for a given consumer but in general this is a suboptimal product, at best. But, for anyone with good or excellent credit (which is about 70% of the US population) there is a plethora of better options available that provide 0% APR for 12, 15 and even 18 months. The only limitation might be a person’s credit limit not being able to accommodate a large expenditure like a new roof or a kitchen remodel. In that type of situation, the loan card in particular might prove useful with it’s long repayment window and reasonable interest rate (7.99% APR). Home equity lines of credit from major banks or local credit unions might have even better terms for those types of need, though, so for those fitting that type of customer profile it would be best to shop around before deciding the best option.
The other major advantage to consider for a credit card alternative is that the ones offering 0% APR for an introductory period are in fact waiving the interest rather than simply kicking the can down the road and hoping that you will trip on it when you get there. That is a big difference.
Most typical Home Depot shoppers won’t get any value out of a Home Depot credit card since they are simply picking up the occasional lawn care tool, light bulb, toilet plunger or can of paint. A run of the mill rewards credit card will nearly always make more sense for the masses.
Alternatives to a Home Depot credit card
Honestly, any regular no-fee credit card would be a better alternative for most consumers compared to the Home Depot Consumer Credit Card because of the deferred interest trap involved with their product. The smart money would recommend going with a cash back rewards credit card that pays at least 1.5% cash back on all purchases. Some are even doubling down on that offer with 3% cash back in the first year.
For general use cash back and rewards cards you can use anywhere, consider these options:
- Credit Recommended (660-850):
- Intro (Purchases)
- 0% 15 Months
- Intro Rewards Bonus
- $150 bonus
- Annual Fee
- Intro (Transfers)
- Regular APR
- 14.99%–23.74% Variable
- Credit Recommended
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
- Earn unlimited 1.5% cash back on all purchases.
- 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
- No annual fee
- No minimum to redeem for cash back
- Cash Back rewards do not expire as long as your account is open
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