Photo: Flickr via peterhess
Whether you’re dealing with a friendly firefighter-turned-roofer or a professional service, the old paper methods of paying for your contractor are on their way out, according to contractor review site Angie’s List.Nearly two-thirds of contractors told the site in a March survey they accept plastic now, and just about one-fifth said they actually prefer it over a thick wad of cash or a check.
But what’s best for the consumer?
Credit cards are the best way to go, Angie says, and there’s a simple reason: You’re far better protected against contractor fraud or botched projects by a credit card company–especially if your card comes with a zero-liability policy.
There’s also a bit of a lag for credit card processing, which gives you a little extra legroom if a job goes bad and you need to cancel a payment.
“Many highly qualified and reliable companies still aren’t equipped for credit card payment, though, and unless consumers insist on credit card payments, this shouldn’t be a large factor in determining who to hire,” Hicks says. “But payment options and payment terms are an important discussion point in the hiring process, so be prepared to talk about how you will pay well before you decide.”
Here’s what you can do to protect yourself, no matter how you pay:
Stagger your payments. Even the simplest home improvement project could take weeks or months to complete. Stagger your payments based on the workers’ progress rather than forking over a lump sum at the beginning. In fact, that’s one sign you’re dealing with a shady business. You shouldn’t pay more than 10 per cent of the estimated contract price upfront, according to the Contractors State licence Board.
Ask about fees. Pay by credit when you can, but keep in mind some contractors will charge a “processing fee” for the convenience.
Debit and credit are not created equally. Many consumers think debit cards are interchangeable with credit cards, but liability issues make all the difference. Some banks don’t offer the same protection for debit transactions as they would for credit purchases. It’s like writing a check–once the cash is gone, it’s gone.
Checks rein supreme. The vast majority of consumers dole out checks for contract work, and keeping the paper trail alive is crucial. Fill out the memo field with exactly what you’re paying for and keep a copy for your own records.
DON’T pay in cash. “With cash, you have no paper trail should something go wrong, and if a contractor is insisting on cash, that’s a red flag,” Hicks warns. That hasn’t kept consumers from hitting the ATM anyway: Nearly 40 per cent of respondents in an Angie’s poll said they paid in cash, and even more troubling were the 12 per cent who said they paid upfront.
No matter what, run your contractor’s information by the Better Business Bureau and National Association of Home Builders, which both maintain logs of prior complaints against contractors. Angie’s List is consumer review-based and also a great way to vet contractors.