I swung by the Living Space location in Van Nuys and the salesman told me about their financing offers…
…and they are a terrible way to pay. As of summer 2013 they only had two offers they were promoting:
- 1st offer: Spend $1,000 or more and receive 12 months deferred financing
- 2nd offer: Spend $2,000 or more and receive 18 months deferred financing
Despite that the employee called it “no interest” that is not what they’re giving you. What Living Spaces credit card uses is deferred interest.
Translation? After the 12 or 18 months, the interest is charged retroactively to your credit card account.
The only way to avoid this from happening is 100% of your financed furniture purchase is paid off before the 12 or 18 months. If you can do that, then you won’t get it retroactively.
Why this is so risky
This financing is done through GE Capital – not Living Spaces Furniture – and here is the APR that GE charges you, according to the application:
That means if you spend $2,000 on bedroom and living room set, at the end of 18 months you might be charged an extra $900 (approximately) for the 18 months of deferred interest. That’s because the retroactive interest is based on the full purchase price, not just the leftover balance that you have after 18 months.
If you do end up owing an extra $900 on a $2,000 purchase, that’s means you will pay almost 45% more for your furniture. Not exactly a good payment plan, now is it?
Living Spaces vs. other furniture stores?
We can’t pick on them too much because the truth is that most furniture stores do the exact same thing with their financing. But that doesn’t make the credit card from Living Spaces any better. In fact you could argue it’s worse because the deferred window is only 12 or 18 months. I have seen other furniture stores give up to 60 months, but I don’t know of any in California that are doing that long right now.
The lesson? Be careful using it and if you’re currently paying the 29.99% interest, then move that balance to another card with a lower rate.
This article was written or last updated July 19, 2013