By offering to accept payments by credit card, contractors demonstrate a higher level of professionalism and customer service. Knowing they can use a credit card reassures customers that they have enhanced financial flexibility and consumer protection. Plus, paying contractors by credit card is often the client’s preferred method of financing a major purchase like a remodel.
#1 Credit Cards Offer Consumer Protection
Most credit cards offer enhanced consumer protections, and if there is a payment dispute the card company will investigate on behalf of the cardholder. That gives consumers confidence that if the quality of the work is not acceptable or on time, they have recourse. Paying by cash, debit card, or check means that the money has already been irreversibly withdrawn from their bank, without those safeguards.
Even the Federal Trade Commission (FTC) states that using a credit card is a recommended way to pay contractors. Homeowners trust consumer protection authorities like the FTC, and may only accept bids from contractors who let them pay by credit card. Give them what they want, and they will not take their business elsewhere. Instead they will be loyal clients and make referrals to their friends who need a contractor.
#2 Credit Cards are the Easiest Form of Loan
Many clients don’t have enough cash set aside to afford to hire a contractor, so they need to borrow the funds. But getting approved for a personal or home improvement loan can be a slow process that involves lots of red tape and documentation. Consumer loans typically require a credit check, and the borrower needs to have a decent credit score. Lenders may want a substantial cash down payment, and may charge significant loan origination fees.
Many consumers would rather just pay by credit card in order to finance their projects without going through the hassle, expense, and scrutiny of applying for a special loan. As long as the balance is paid off in a timely fashion it can be an easy, effortless experience and an affordable payment strategy.
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#3 The Rewards Can Be Attractive
Coming up with the money to hire a contractor may also require financial sacrifice. A customer may have to forego a family vacation that year to afford it. But using a credit card that offers a generous rewards program and/or attractive sign-up bonuses may allow them to avoid such sacrifices. A number of different cards, for example, offer new cardholders enough free rewards points, as a sign-up bonus, to pay for an extended hotel stay or round-trip airfare.
All the cardholder has to do is charge a certain amount to the card within the first 90 days, which they can accomplish by paying their contractor. Many cards also offer direct cash back rewards, so the cardholder gets a built-in discount by using their card instead of paying by check. Maybe they will reinvest the money they save to rehire the contractor for another project, which is a win-win for both the contractor and the customer.
While these are among the top three reasons clients want to pay contractors with credit cards, customers also enjoy and expect the convenience and security of mobile credit card payments. Contractors using the right payment processing system can accept online payments 24/7, for instance, with e-invoicing and instant generation of detailed customer receipts.