Lazy Boy Credit Card Financing Is Playing With Fire

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.

regular APR on Lazy Boy's financing

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.

The takeaway?

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

 
Comments
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These deals are great for anyone that uses common sense. Take the amount charged and divide by the months that you have been given interest-free. That is the minimum payment that you should make each month in order to ensure that the balance is paid off before the interest that has accrued is added. Anyone that thinks by just making the minimum required payment is seriously not credit savvy. I’ve used this method of financing both with Lazyboy and other retailers and I’ve never paid the interest charge at the end.

I have used similar offers in the past. I charged $1800 and had 12 months to pay it off. I had the income to pay $200 a month in payments, and paid it off in 9 months. So I got to buy what I needed and have it right away rather than wait a few months and pay in full. I also paid a month ahead of time, so there was no risk of missing a payment. If you have the income, there’s no need to stay away from these offers. IF, on the other hand, you’re not sure that you can pay the balance off well before the end of the offer, you should probably wait and save up some money before you buy. If you miss one payment or don’t have the balance paid in full before the time limit is up, you will end up paying a HIGH INTEREST RATE PRORATED FROM DAY ONE.

Jerry Kindall

We used this for our living room furniture. It’s a fine deal. Sure you will owe back interest if you don’t pay it off by the end of the promotional term. But the required equal payments guarantee that will happen. And they have autopay, so no risk of missing a payment. Certainly it’s more convenient to have 0% for three years with no hassle than to transfer the balance twice, at 3%-5% BT fee each time depending on the card, even assuming you can get a good balance transfer deal a year or two years from now.