It’s no secret that people like to live comfortably. This is especially true when it comes furnishing their homes. People like nice plush couches and beds that feel like clouds. There’s nothing wrong with wanting your home to look and feel a way that makes you proud.
Yet, what happens when you can’t afford to pay for the things that you want up front. This is where the problem usually comes in. People are struggling enough to maintain the bills that they have, so spending a large amount of money on furniture isn’t really a priority. That’s the time that eyes become open to those ““no-money-down “” advertisements.
These ads promote the sale of furniture, with “no-money-down “, at the time of purchase. However, there’re many things that are either; never mentioned in the ads, spoken so rapidly that you’d have to speak ‘auction-ese’ to decipher what was said or is relayed somewhere in print that’s so small it can’t be seen. This is how people get bamboozled into running out to the nearest furniture store with a promotional sale.
The Store Credit Card
When you get to the furniture store and inquire about their “no-money-down “plan, you’ll hear a very inviting response. The super pleasant salesperson will inform you, while wearing the biggest smile, of all of the benefits of the offer. He’ll tell you that if you purchase using this plan, the store will hold the payments and interest for a year; sometimes longer. You’re going to love everything you hear.
You may not notice but through the course of this conversation, you’re being lead to his desk. It’s there, that he will explain that all he needs you to do is take 10 minutes to fill out an application for a store credit card. He’ll also remind you that you don’t have to put any money down on the furniture that day and that the payments and interest being withheld for a year.
Although you may not be spending any money at the moment, what you are actually doing is charging the furniture to the store credit card that you have just been approved for. So, in a sense, the ad is right. You aren’t putting any money down; you’re paying your total purchase, by default. When you sign your name to the contract, you are simply telling this store that you are indebted to them for the total amount spent on your furniture.
Many furniture stores also use the ““no-money-down “” ploy to get customers in the door and entice them into contracts that will allow them to make monthly payments until their furniture is paid in full. Very few people pay attention to the fact that the first payment is usually the highest one. It’s because the majority of the money that you didn’t put down this time, is picked up there. It is then broken up throughout the next few payments until it’s collected in full.
One of the best kept details of these “ no-money-down “ offers is the interest rate; or should it be the change in the interest rate. How many times have you noticed stores offer lower interest rates during a promotion? It’s no different with the purchase of furniture. It’s still promotional.
What they don’t tell you is that the interest rate will return to the standard rate that is applied to the credit card. As of May 2011, the average store credit card had an interest rate of 24 percent. This would be the rate charge after the promotional rate has run its course.
Something else that they don’t mention is that interest begins to accrue form the day of purchase. They said they were holding it back…not that you weren’t going to be charged. So, as you spend a year breaking in your new furniture; these interest rates are being charged to that store credit card.
The Subject to Change Clause
There is a line that appears on every contract in the natural world. Whether you see it or not, it’s irrelevant because it’s there. It’s the one that everyone ignores because they never expect any changes to occur. That line simply reads, “All deals are subject to change”.
This, friends, is the clause of all evil!!!! Still, many people sign their name on the dotted line without hesitation. Trusting that the deal they are getting is the one that will remain in place. No one gives thought to what the clause is really saying.
You are subject to any change that the company may choose to make the agreement that you signed at the time of purchase. Imagine what would happen if they choose to raise fees and interest rates. Paying your bill on time every month can’t stop this! And it can happen at any time during the contract, even if it’s years in.
No matter how small the print is, the company can argue that the clause was present. The saddest part is that a lot of times, the only way to get out of the contract are to pay the total amount owed.
Late Payments Can Be the Death of You
Penalties that are tacked on to monthly bills for late payments are nearly as ridiculous as the interest rates charged by furniture stores for these “no-money-down” promotions. Payments as little as a day or two late can result in the company deciding that you are a risk and raising your interest rates even more. The fact that these cards are from a store, frees them from being bound to follow some federal regulations.
These too-good-too-be-true offers are just that. Although the idea of having what you want is appealing; the financial trap that is set up through these offers is really unavoidable once you have put your name on the contract. The best way to stay out of financial ruin is to stay away from them altogether. It’s a plan that has you in debt in the end.