Even discount furniture can be expensive and often times, folks turn to a credit card to finance. The Value City credit card is offered to their store shoppers, but is it really in the customers’ best interest? Don’t fill out a Value City Furniture credit card application without understanding how it works!
Watch out for this interest rate problem!
The financing promotions can change every once in a while, but here are the options the Value City Furniture store in Taylor, Michigan was offering at the time of writing:
- No interest on any purchase if paid within 6 months
- No interest on $1,500+ purchase if paid within 12 months
- 9.99% interest on purchase of $1,500+ for 5 years
Note: you can only get one promotion, not all of the above on the same purchase!
At first glance these credit card payment options from Value City sound like a half-way decent deal, but once you read understand all the terms and conditions you will probably think differently…
The 6 and 12 month plans are deferred interest
A lot of people assume that these offers mean there is no interest for the first 6 months (or 12 months) but that is not how they work. Let me explain…
In order to avoid interest entirely, you need to pay off every single dollar of the purchase before the promotional period is up. If you don’t, you get charged interest on the entire purchase going back all the way to the date of purchase! So let’s say you make a $1,200 purchase but it takes you 7 months to pay it off… you are going to be charged interest for that entire 7 months on that purchase! At the time of writing, the APR is an extremely high 24.99 percent!
These “deferred interest” plans can be a real nightmare, because in today’s economy a lot can change in 6 months. If something unexpected happens to your personal finances and you aren’t able to pay the full amount before the time is up, you’ll owe a fortune in interest with the Value City Furniture credit card.
The 9.99% interest plan is good, but you can do better
If you anticipate any chance at all of carrying the balance on your Value City Furniture credit card past the promotional period, then the 9.99% flat interest from day one would be the lesser of the two evils. However, it may be possible to find an even better option…
With a regular major credit card, there are sometimes promotions that offer 0% interest for the first 6 to 12 months. The difference between them and the Value City credit card is that they won’t be 0% “deferred interest” promos. There won’t be any back interest to pay if it ends up taking you longer than the 6 or 12 months to pay the full amount… so you are truly getting 0% interest during the promo period no matter what.
Credit Card Forum has a sponsored ranking of the best credit card promos that give 0% on purchases:
Written or updated April ’11