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It's very tempting but could be dangerous! If you want to do this I suggest you make a plan for paying it back, like setting aside a certain amount of money a month for the next 12 months so you can just pay it off when the interest free period is over. Otherwise you might get yourself into a big financial mess.
Yes those free money deals for credit cards and appliances / furniture are good deals if and only if you have the money to pay it off within 12 months. It's a smart idea if you have the money, b/c if you keep it in your savings account for 12 months, it's earning interest (AND you're enjoying your new furniture). But if you think, oh, i can save for this next month and end up missing your deadline, the fees and interest rates will kick your butt.
I don't like the idea of buying stuff you can't actually afford this very minute. Why don't you buy just a piece or two at a time over the course of a few months?
Don't count your chickens before their hatched, or rather, plan on having the income in the future. If something happens and you NEED the money, it's the first step in falling behind.
I am not a fan of charging things like furniture to be honest. It's not rally a necessity in the same way a car or home is and if you miss that 12 month timeframe, the interest rate is a killer. I will echo ejs and suggest you just buy once piece at a time.
FI's car died last night and we are passing papers on our home next month and therefore can't get a car loan now. So we would need to use cash and that would be some of the cash for our furniture. I am just trying to figure out every avenue. When it rains it pours LOL.
Maybe I will sit down tonight and see if we can make a budget and put aside additional funds to pay this off as soon as possible. If we can then we might think about it.
I am not someone who charges anything. I use credit cards just to build credit and never put much on them. But I am just really limited on cash and need everything at the same time.
I agree with buying one piece at a time.
FI and I redid our kitchen in August (new granite & backsplash) and used all cash, however we couldn't afford new appliances at the time so we saved up and just last month got all new appliances paid for in cash. For us it's a good feeling having new things and knowing we have no payments on them. While we were at the store looking at appliances we saw new furniture and the store also had 12 months interest free and as much as we both wanted the new furniture we had to just say no. Now we are saving for hardwood floors and a new kitchen island/bar which will be done this spring/summer. We are hoping to use some money we get from the wedding to get a new dining set and put the rest in savings for the furniture when we get all the money.
isn't that always how it is! Roxy, where are you from? apartmenttherapy.com always shows good sales for nice furniture in the major US cities - LA, Chicago, NYC, SF, DC, and Boston. Just today they had a really cute sofa that they featured from Craigslist. You could always go that route and buy the pieces you NEED that are used but in good shape.. But even if you're not in major cities, you can find a lot of great stuff on craigslist.
I would only do it if you are ABSOLUTELY sure you can pay it off in 12 months. With most of these cards, all the interest that you would have been accruing during the 12 months if it was at the regular rate will get tacked on to your bill at the end of 12 months.
We've done this with our sofa & love seat set and our TV
But only do this if you know you that you will pay it off by that time. Otherwise typically the interest rates are VERY extreme.
We tend to make small payments along the way and make doubly sure to pay it off before the promotional period ends.
Often times when we do this it's because of a very good deal that you just can't pass up. Sorry but we don't have a couple grand to throw on new furniture! Over time within a year. Yes.
As other bees have mentioned, it can be great if you know you have that set amount each month to pay off the card in time before the interest kicks in. When are you planning on getting the furniture? If you want to get it before you close on your house, be careful because opening a new line of credit while in the mortgage application process could harm your approval.
@Melissabegins- Thanks I will check out that site. We are out of Boston. We have nothing as we both still live home so it's not like we can just use what we have.
@Piccateer- We wouldn't be doing it until after we close. We can wait a couple of weeks for furniture but not to be without a car, he owns his own business so no car means no work.
I won't so it if we can't pay it off within a couple of months after the wedding. It's just that I would have to start charging vendors and I don't want to get into that habit either. But thanks for the tips because I certainly don't want to pay all that accrued interest.
It's a shame you don't have a crystal ball to predict if/how much money you will receive as wedding gifts, huh? :)
Oh yeah um, I *thought* we'd end up with a certain amount of money from the wedding and we ended up with like 3K less than i thought we would (based on what I read on the hive and whatnot)
You know, you could always register for some furniture! That's how we got our patio set =]
@Melissabegins- I know that would be fantastic! And people keep saying wait until after you get your gifts but I need a place to sleep, eat, and sit in the meantime!
Walmart furniture anybody? Or Craigslist? Cuz i pretty much lived on cheap crap like that for a few years.
Garage sales, too. I got my entertainment system for $25. Sure it's fugly as hell, but we're saving up for the "nice" living room furniture. This weekend we're buying a coffee table. They aren't cheap! Definitely think about being resourceful for now....it's hard to not furnish your whole house all at once, but really, it's not always financially smart. Especially if you're already having money woes. First it's the car, then it's the heating unit in your house, then it's your stove, etc. We've already replaced a garage door, a few lighting units, the stove, and the refrigerator. All in 2 years of home ownership
I'll admit, I do those deals.. but I also pay them off within the time frame. Calculate the payments and if you're absolutely sure you can swing it with a pretty big buffer, I don't see a problem. But only if you can pay it within 12 months!
I did this with wedding purchases and an AmEx 0% interest intro rate. If you make sure you pay it off during the time period, it's brilliant.
The only time I've done this was for a tempurpedic bed that FI and I bought after I moved in with him. We got 5 years no interest, so we just divided the total amount by 5 and pay that much each month. In that one case, it worked for us, but even knowing that was what we would do, I wasn't entirely sold on the idea.
We did this for our couch/love seat and made sure to pay off the balance before the promotional period ended. Another word of caution: opening too many credit accounts in a short period of time will negatively affect your credit rating. So, try not to use the "12 months no interest financing" at too many stores. I learned this the hard way.
If you buy furniture under on of those no interest for 12 month deals, make a plan to pay it off before the 12 months is over. If you have a balance at 12 months, you will have to pay all the interest that would have accrued on the entire balance from the beginning of the 12 month period. It's a good way to leverage your money if you can afford it.
I actually did it for my living room set through Cardi's (they are in MA and surrounding area). We did no interest for 12 months but as the others have said you have to actually pay it off in that time frame. Its tempting when the bill comes and you see your minimum payment due is $10...but you actually need to pay closer to $100 (as an example) so you don't get charged the interest. If you are confident you can pay it off then I say go for it.
Charging our couch at Restoration Hardware was the best decision ever! I know how weird that sounds but hear me out...
Interest free financing for 12 months PLUS there is a point system for how many dollars you've spent there totaling up to free $ to spend there. Our couch and chair was around 6k, and we've gotten about $1500 in vouchers to spend there. It cant be used towards your bill but getting random $100-250 vouchers has been really nice.
We put a ton of $ down so payments are $100/mo. However, I dont think you should charge stuff that you cant afford realistically- you never know what the future holds but if you are going to buy something anyway at RH I suggest putting it on the card for the perks.
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I am on the fence about this and wanted to know if other have done this and what their opinion is.
All of the furniture stores seem to have interest free for the first 12 months. Seeing where everything is adding up so quickly between the wedding and the house, this offer looks very tempting.
Any advice?