Is the American Signature credit card a bait ‘n switch?

Q: A year ago I bought a bedroom and living room set using the credit card from American Signature Furniture. The total cost was about $1,800 and the sales rep told me it was 0% for 12 months. I am now on month 13 and on my current bill the balance jumped from $700 to over $1,100. What the [blank] is the interest rate on this card if it goes up $400 in just one month?!

A: Be warned, this doesn’t operate like your normal credit card. I suppose this warning may come too late for you, but you need to be aware that the American Signature Furniture credit card isn’t a true 0% offer. The sales rep should have explained it to you…

credit card APRHow it works is that they give you no interest, but only if you pay it off during the specified time. If you don’t, then they go back and charge you interest – retroactively – from day one of the purchase, at the standard APR (pictured right).

For example…

  • Say you made a $1,800 purchase on October 1, 2012.
  • You still owe $500 on October 1, 2013 (one year later).
  • Because you didn’t pay it off in full within the 12 months, the interest going back to day one is added to your bill on the 13 month. Considering the hefty APR, that will likely be hundreds of dollars in retroactive interest.

But not to beat up on American Signature stores, because most furniture stores operate their credit cards the exact same way. This is why almost any other source of financing is a better alternative if you are not 100% confident of your ability to pay off the purchase on schedule.

The current offers…

I called up a store in Florida to ask about the current credit card financing incentives and here’s what they told me:

  • 12 months no interest if paid in full on purchase of $1,600+
  • 6 months no interest if paid in full on purchase of $750+
  • 60 months at 9.99% if paid in full on purchase over $1,500+

American Signature 60 month financing

Initially I thought the last one for 9.99% sounded OK but the guy I spoke to said it also uses deferred interest. So if for some reason it takes you longer than 60 months, then you’re going to pay the 28.99% interest going back to the first day!

Should you use them or not?

This is one of those situations where the answer really comes down to what your credit score/worthiness is:

If you have average or good credit then skip the American Signature credit card. Why? Because with a normal card, you can get true 0% without the retroactive interest. My recommendations would be the Slate card from Chase or the Discover’s 0% intro offer.

If you have a poor credit rating then the offer from American Signature will probably be the best you can get. The store sales rep I spoke with even told me that if American Signature doesn’t approve someone, then they still might get approved for a different unlisted offer for really bad credit thru a company called Fortiva. How it works is if your AS credit card application is denied, then they check if you qualify for the Fortiva offer, which gives 6 months deferred interest.

If you already have their credit card then my best advice is to pay it off as soon as possible. Try and do a 0% balance transfer to move you debt off the card if you are approaching – or have exceeded – the end of your promotional period.

Written or last updated October 30, 2013

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Elizabeth Harrison

This is good but guess what?

I have been trying to pay my bill and they will not send me one in the mail. I will probably need to get an attorney involved. When I call the finance company they say that they do not have any billing information from American Signature yet. When I call American Signature they say that they sent the billing information over to them already. I will probably get the bill 2 weeks before it is due in full.

Again, I will probably need to involve an attorney…so sad