Have you ever been shopping at Lowe’s and noticed a sign promoting the Lowe’s Advantage Card?
The in-house store credit card offers your choice of 5% off purchases or special financing offers for no-interest or low-interest payoff periods.
Although that’s tempting, money expert Clark Howard says these offers are not for everyone: He says there are risks with store credit cards like these that you may not be aware of. I’m going to detail those, as well as all the pros and cons of this card, in this article.
Table of Contents
- What Is the Lowe’s Advantage Card?
- How Can I Save Money with the Lowe’s Advantage Card?
- Is the Risk Worth the Potential Reward?
- Alternative Home Improvement Financing Methods
- Final Thoughts
What Is the Lowe’s Advantage Card?
The Lowe’s Advantage Card is an in-house store credit card offered by the home improvement retailer. It does not carry a Visa or Mastercard logo. This means it is only for purchases made at a Lowe’s store or through Lowes.com. And you can’t use it for purchases at any other retailer.
This card, which is often pitched as a quick-approval option while in the store, does offer two potential benefits. You can use it for special financing for home improvement projects, home appliances and more. Or you can use it for 5% off the purchase price of eligible items. If your purchase qualifies for both, you must choose one or the other.
How Can I Save Money with the Lowe’s Advantage Card?
There are a couple of different ways that you could use the Lowe’s Advantage card to enhance your purchases at the home improvement store:
- Discount off the purchase price
- Special financing
It’s important to note that these two ways cannot be combined. The fine print on the card excludes it, and it is clearly explained on the Lowe’s website:
When you look at these options, you may notice that the 5% off is similar to what some non-branded credit cards offer in cash back or rewards points. But the advantage here is that you’re getting an immediate 5% off your purchase price rather than a reward of a credit on your billing statement.
Clarks says the 5% discount is enough to consider this card if you’re a frequent shopper at the store. That comes with an important caveat, though: He says you must pay your balance in full each month for the discount to be worth it.
The special financing offers are where people may run into trouble. Clark has a warning on retroactive interest with these purchases. I’ll explain that later in this story.
How to Use the Lowe’s Advantage Card
|Discounts Off the Purchase Price||Special Financing Offers|
|5% Off Most Everyday Purchases: There is no limit to the number of purchases you can make at the 5% discount, but there are some limitations and exclusions you should note.||6 Months of No Interest Financing: If you spend more than $299 on a purchase with this card, it is eligible for “special financing” that will let you pay it off in monthly installments for six months. However, if you don’t repay the total by the end of the term, you could be subject to retroactive interest all the way back to the date of sale.|
|10% Off First Purchase: At the time this article was written, Lowe’s was running a promotional offer: 10% off the first purchase made by new cardholders. The discount, which was an active promotion at the time this article was written, was capped at $100.||84 Months of Fixed Payments: With a purchase of $2,000 or more, you can use this card to pay at a fixed APR. While that may sound good on the surface, the fine print offers a warning: You must make fixed monthly payments for the duration of the payback period.|
Is the Risk Worth the Potential Reward?
The idea of an interest-free six-month period to finance your next big household purchase is attractive on the surface. But there are risks involved.
The main risk associated with this card is retroactive interest. Let me explain how that works.
If you make a Lowe’s purchase of $299 or more, you can use this card to get 0% financing on the purchase for six months.
If you fail to pay the balance in full by the end of the six months, you will be assessed retroactive interest charges on the full purchase amount. And that interest accrues from the date of the purchase, leaving you owing well in excess of the amount you saw at the register.
Though interest rates vary based upon your credit assessment, it’s likely that your APR will be higher than the national average if you incur the retroactive interest.
After digging into the fine print on this offer, I found a few other things to consider:
- Making the required monthly payments is not necessarily going to be the path to paying off your purchase: “Depending on purchase amount, promotion length and payment allocation, the required minimum monthly payment may or may not pay off purchase by end of the promotional period.”
- If you have more than one purchase financed on the card, your payments may not go directly to the special finance offer: “Some or all of the minimum payment based on the promotional balance may be applied to other account balances.”
Clark doesn’t like the special financing, but if you use it solely to get the 5% back and pay it off monthly, this card could work. For shoppers who fit into this category, you may also want to consider using a rewards credit card that can be used anywhere.
Using a cash back credit card, such as the Citi Double Cash, could be a way to secure 2% cash back without having to tap into a new line of credit. Revolving cash back cards, such as the Discover it Cash Back Card or Chase Freedom, offer 5% cash back on categories that change every three months. It’s worth checking those categories before your Lowe’s purchase to see if you may qualify for the 5% discount.
2 Alternatives to the Lowe’s Advantage Card
If you are looking for an alternative to using a store credit card, Clark says these are better ways to finance your upcoming home improvement project if you can’t pay for it in cash.
Clark’s First Suggestion: Home Equity Line of Credit (HELOC)
If the project is large enough, you may actually want to visit your local bank or credit union first. If there is equity in your home, applying for a home equity line of credit may be the most prudent financial decision.
Clark says you’re probably better off securing a lower APR rate via traditional lending if you know you can’t pay off the full balance of your purchase before the introductory offer expires.
“Even though they’re going to pay interest right away, they’re going to pay a much lower effective interest rate than even with 6, 12, or 18 months at 0% but then goes to a 25% or higher interest rate later,” Clark says.
Clark’s Second Suggestion: Low Fixed-Rate Credit Card
Is your home project expensive, but not worth leveraging the mortgage on your house? Clark has another alternative: Ask your bank or credit union about its lowest fixed-rate APR credit cards.
Clark says you often can find a fixed-rate credit card at a credit union for under 10% APR. He would prefer locking in that card rate and trying to pay the balance off early instead of using the 84-month, fixed-rate financing through Lowe’s.
If you are considering a large purchase at Lowe’s, the temptation will be there to apply for the Lowe’s Advantage Card. Here are some pros and cons to consider before you make that decision:
Lowe’s Advantage Card: Pros and Cons
|Up to 10% off first purchase with the card||Cannot use the card anywhere but Lowe’s|
|5% off most Lowe’s purchases with the card||There is potential for high APR interest accrual|
|Special financing offers give 0% periods on some purchases||Retroactive interest is due on special financing if not paid in full by end of promo period|
Bottom Line: If you have the financial flexibility and personal discipline to pay your bill for this card immediately, you could enjoy 5% off most of your home improvement purchases. However, if you’re trying to finance a home improvement project that will take you some time to repay, money expert Clark Howard strongly cautions against getting involved with this type of credit.