2013 Living Space Credit Card Is a Trap

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:

GE Capital's rate on Living Spaces financing

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

 
Comments
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The person who wrote this article is an idiot, like most people who didn’t pass basic math in high school. This is a NO INTEREST loan, IF you pay it off in full during the promotional period, NOTHING IS BETTER THAN FREE MONEY!! Any freshman economics major can tell you that. Even if you receive less than 1% interest on your savings account, as is the case today, you are STILL AHEAD of the game with this financing. As “big spender” said, if you can’t afford the payments, DON’T BUY THE FURNITURE!! People in this country fail to take responsibility for their actions today and are so quick to blame someone else for their mistakes.

If you cant afford to pay off your $2000 furniture purchase in 12 or 18 months, then you need to keep your old furniture or hit up the Salvation Army. GE is giving you a 12 or 18 month interest free loan and you are bashing them? Come on now, sounds to me like someone needs to be a bit more fiscally responsible.

I not just pay in full the bal/ on the last month.

Read the terms understand the terms and you are good. You clearly didn’t understand the terms. Shame on blaming the bank and living spaces. I see no point in this article.

The terms are clearly displayed on each statement with the exact date on which the balance must be paid in full so as not to accrue the deferred interest. The terms of the charge and the zero interest promotion were very clear to me. It is just a matter of responsibility to not charge more than can be paid off in the allotted time. I have been able to furnish one room at a time and stay well within the zero interest guidelines. I’m happy with this option and it has worked well for me.

In all honesty everyone is aware of what it means when u get a promotion like that, every store does it. Its just a great way to pay your purchase items without any interest.
If u do allow the 12-16-24-36 months to pass by without a payment that’s just means the person purchasing isn’t too responsible. So, living spaces is just offering an easy way for customers to afford what they are selling. No harm in that. Whatever banks end up charging has nothing to do with what the stores would rather charge in late interest. Banks have no legal lean on charging a fair amount.