“Should you use a credit card to buy furniture?” . This is a question I often encounter. The short answer is, credit cards can be a viable option for financing furniture, especially when you can take advantage of a 0% APR offer. However, it’s important to remember that these offers usually have a limited duration. So, you need to carefully read the terms and conditions and be ready to pay off the balance quickly, typically within the first 12 months, before the interest rate increases.
On the other hand, retailers often prefer immediate cash payments to avoid credit card fees, even if it means reducing the purchase price slightly. Moreover, experts generally advise against financing items that depreciate in value, like furniture or appliances. So, while credit cards can be used, it’s crucial to consider these factors before making your decision.”
Pros And Cons of using Credit Card to Buy Furniture
Using a credit card to buy furniture can be a convenient way to finance your purchase, but it also has some drawbacks. By the way we have a detailed article on “Pros and Cons of Using Credit Cards to Finance Furniture” go through it to understand things in great detail which will eventually help you in taking more informed decision. For now lets look at some pros and cons of using a credit card to buy furniture:
Pros
- You can take advantage of 0% APR offers from some credit cards, which allow you to pay no interest for a certain period, usually 6 to 18 months.
- You can earn rewards, such as cashback or points, from your credit card spending, which can help you save money or redeem it for other benefits.
- You can enjoy purchase protection and extended warranty from some credit cards, which can cover you in case of damage, theft, or defects of your furniture.
Here we have made easy for you to calculate your monthly payment and how much your loan will cost you using our APR calculator .
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Cons
- You can incur high-interest charges if you don’t pay off your balance in full before the 0% APR period ends or if you miss a payment. The average APR for credit cards is around 19%, which can add up quickly.
- You can lower your credit score if you use less available credit or make late or missed payments. Your credit utilization ratio, which is the percentage of your credit limit that you use, should ideally be below 30%. Using more than that can result in bad credit score.
- You can get into debt if you spend your money on your credit card or can afford the monthly payments. This can lead to a cycle of debt that can be hard to break.
Do you know the pros and cons of Furniture Financing ? If you don’t then it’s a must read !
Is It Good for Your Credit to Finance Furniture?
If the payments align with your budget and you opt for a zero- or low-interest alternative, financing a furniture acquisition can contribute to improving your credit score, provided you consistently make timely payments.
Financing furniture can positively and negatively impact your credit, depending on how you do it. Here are some ways that financing furniture can affect your credit:
1.Financing furniture with a personal loan can improve your credit if you make timely and consistent payments and diversify your credit mix. Different types of credit, such as revolving credit (credit cards) and installment credit (loans), can boost your credit score. However, taking out a personal loan can also temporarily lower your credit score, as it will result in a hard inquiry on your credit report and increase your debt-to-income ratio.
2. Financing furniture with a store credit card can hurt your credit if you have multiple loans and credit accounts or miss any payments. Store credit cards are often considered “loans of last resort” by creditors, as they are easier to qualify for than other credit accounts. Still, they also have higher interest rates and lower credit limits.
Having too many store credit cards can lower your credit score, as it can indicate that you are a risky borrower. Missing a store credit card payment can also damage your credit score, as it will show up on your credit report and affect your payment history, which is the most critical factor in your credit score.
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3. Financing furniture with a home equity loan or line of credit can improve your credit if you use it wisely and responsibly and benefit from lower interest rates and tax deductions. Home equity loans and lines of credit are secured by your home, meaning they usually have lower interest rates than unsecured loans and credit cards. They also allow you to deduct the interest you pay from your taxes, saving you money.
However, using a home equity loan or line of credit can also hurt your credit if you borrow more than you can afford or default on your payments. Suppose you fail to repay your home equity loan or line of credit. In that case, you risk losing your home to foreclosure, which can severely damage your credit score and financial future.
Our “7 Best Furniture Financing Options“ guide dives deep into each option, with pros, cons, and expert tips to help you choose wisely. Check it to find your perfect fit!
Conclusion
Using a credit card for furniture can be smart with a 0% APR offer, allowing you to split payments interest-free and potentially earn rewards. However, strict budgeting is crucial to avoid high-interest charges after the introductory period ends. Remember, late payments and high credit utilization can negatively impact your credit score. Consider alternative financing options like personal loans or store credit cards, but be mindful of potentially higher interest rates and fees. Ultimately, the best choice depends on your financial situation, creditworthiness, and ability to manage credit responsibly.
Most of you’re not sure if you should buy furniture in cash or finance it. You don’t want to make a costly mistake that will haunt you for years. Click here to read the blog and find out Is it better to buy furniture in cash or finance? Trust me, you don’t want to miss this.
Confused about furniture financing? Our Furniture Financing Guide will help you out in this!