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You could easily spend one thousand dollars to furniture your living room or bedroom. The costs of furnishing a home is so pricey that some people buy a house, rent furniture or sleep on a mattress for months. They don't buy new furniture until they get a promotion or raise at work.
Getting tempting to furnish your home on credit
Furniture retailers are paying attention. Several years ago, furniture retailers started running television commercials that advertised payment plans people living on tight budgets could afford. What was and still is attractive about these plans is that they are interest free for several months.
Over the years, the amount of time that furniture plans go interest free has lengthened. Today it's possible to furnish your entire home on credit without paying interest for more than a year. It sounds good, but there are catches to furnishing your home on credit.
Look out for these catches when furnishing your home on credit
- Getting into the habit of only sending in minimum monthly payments will likely ensure that you end up paying loads of interest on the back end of the plan. When that interest is compounded, you could end up paying more than twice for the furniture than you intended or thought that you would pay.
- Just because the furniture repayment plan is interest free, that doesn't mean that you won't have to pay late fees if you're as much as one day late with a single payment.
- Should the furniture get damaged after it's delivered to your home, you could be responsible for repairing or replacing the furniture. This is a reason why you should inspect new furniture as soon as it arrives. Really look the furniture over and report any damages or defects to the furniture retailer as soon as possible.
- Penalties could be added onto your repayment plan if it isn't paid off before the interest free portion of the plan ends.
- Because you know that your furniture repayment plan only requires you to send in $50 or so each month, you could buy new products or services. If you don't repay all of the money owed on the furniture in time and the monthly payments triple, you could get into a financial bind.
Choosing to furnish your home on credit puts new furniture within your reach. However, it's not a given. Furniture companies will generally check your credit before they approve you for an interest free repayment plan. You need to have a history of demonstrating that you are financially responsible. Even more, although the repayment plans are interest free, you could get hit with late fees and late penalties.
Worst of all, you could think that by making the minimum payments, you'll pay for the furniture before the contract ends. You could deceive yourself into believing that you will never have to pay interest on the furniture. Get ahead of the repayment plan and make the furniture off as soon as you can. It's generally the only way that you'll really enjoy furnishing your home on credit without ever paying interest.