If you’re contemplating using your HELOC loan for a major purchase, you should consider whether or not the merchant your dealing with accepts credit cards. Why? Because it makes a great deal of sense to pay first with a rewards credit card and then pay off the card with a check drawn on your HELOC loan account.

On a recent $14,000 bathroom remodel, I was able to charge plumbing services, cabinets, and almost everything else to my Fidelity/MBNA 529 College Rewards Mastercard. This card pays you back by putting 2% of everything charged into a 529 college savings plan. Result: $280.00 in college savings that would have been missed paying the bills directly with HELOC loan checks!

Whatever rewards credit card you favor, it’s sensible to pay first with the card whenever possible. Keep in mind, though, you must promptly pay off the balance and not incur finance charges.

This credit card rewards calculator shows how paying interest on a carried balance erodes the value of your credit card rebate earnings.