If you have – or are thinking about getting – their in-house financing card, make sure you know how it really works.
At sales rep at my local Lazy Boy Furniture Gallery in Torrance was trying to sell me on their credit card. During July 2013 these were the financing promotions he said they had:
- Spend $1,000 or more and get 12 months interest-free financing
- Spend $2,000 or more and get 24 months interest-free financing
- Spend $3,000 or more and get 36 months interest-free financing
Unless you have terrible credit and can’t qualify for something better, you should pass on all of these. Why? Because the Lazy Boy credit card – as most store cards do – uses a type of interest that’s deferred.
On regular credit cards they may advertise 0% interest for say, 18 months, and that is exactly what you end up getting.
On Lazy Boy financing and similar store cards when they say 0% for 24 months, you only get that under one condition: if all of it is repaid during the 24 months. If so much as a dollar is carried over past the 24 month mark they will add back interest charges for the full time, on the full amount.
With the APR they charge, if you ended up getting hit with the deferred interest, you will end up owing:
- On a $1,000 purchase, after 12 months that’s $299.90 in finance charges
- On a $2,000 purchase, after 24 months that’s $1,379.48 in finance charges
- On a $3,000 purchase, after 36 months that’s $3,589.48 in finance charges
Look at that! If you had purchased $3k in furniture from Lazy Boy, you would have paid more than double that amount in the event any of the balance was carried past the 36 month mark.
If you have a decent credit score and you’re just buying a recliner or sofa, then use a regular bank card that comes with 0% on purchases. You should have a good chance at getting a bank card that comes with a credit limit sufficient to do that, even if your credit is marginal.
Sure, the 0% duration will probably be shorter (right now most are 12 to 18 months long) but they don’t use deferred financing. So interest doesn’t begin accruing until after that time frame.
And if a year or a year and a half isn’t long enough, then you can do a balance transfer to move the debt to a new 0% offer. Ultimately, going that route is much safer than gambling with the Lazy Boy Furniture credit card. Because even if right now you think you can pay it off in time, what if your circumstances change between now and then?
This article was written or last updated July 19, 2013