Interest free credit vs savings

[rachie004]

OK so - the story is I have fallen in love with a sofa that is rather above what I had ideally budgeted for. My original plan was to buy all my furniture using my savings and then syphon money off each month back into my savings accounts, like paying back a debt to myself?

I still intend to do that but with this sofa I'm thinking it means purely working 8 days overtime to pay for it so I'm tempted to get it on an interest free credit dealy for the two years (although it wouldn't take the 2 years to pay it off, I'd be excessively generous by saying it'd take one year). I can set up a direct debit each month for the suggested monthly payment amount (ie cost of sofa divided by 24) and then when I do overtime pay each 'day off payment' from the balance too. Meanwhile my money can be safely tucked up in my ISA earning me interest?

Does that make sense? Good idea/bad idea? Should I just use my savings?

[girl with sharp teeth]

Good idea - as long as you have your savings there to back you up if you don't manage to repay the full amount within the interest free period and you can trust yourself to stick to it.

[Calvin]

Assuming the sofa isn't ridiculous over priced, then go ahead with the interest free credit option. This is effect a interest free loan from them for you to buy the sofa.

Take the interest free credit option and put your savings to work somewhere else.

:thumb:

[budda]

I'd check with the company to see if they are willing to accept money like this in stages, they may want you to pay set amounts (so you have debt at the end of the two years) or all at the end of the two years.

If this is the case just set up a 'sofa savings' account and put the money in there till needed.

[rachie004]

Buddha, its like a credit card where u can pay whatever you like off, or so I can gather anyway

Will double check though - thanks for the good tip :thumb:

And I need a sofa in 3 weeks otherwise I'll end up being sat on milk crates :p

[budda]

Buddha, its like a credit card where u can pay whatever you like off, or so I can gather anyway

That makes it a lot easier. I had a fantastic thing happen when I bought a sofa this way, they took the deposit then never got round to chasing me for the other payments, so I got a really nice sofa bed for about £250.

[purplebutterfly]

Buddha, its like a credit card where u can pay whatever you like off, or so I can gather anyway

Will double check though - thanks for the good tip :thumb:

If it will let you do taht then great, if you have to pay at fixed times stash the money aside and earn some interest on it.

[MrG]

That makes it a lot easier. I had a fantastic thing happen when I bought a sofa this way, they took the deposit then never got round to chasing me for the other payments, so I got a really nice sofa bed for about £250.

Let us know where you got it from, incase they do it again ;)

[Kermit]

If you are allowed to pay small installments then you could consider paying the minimum payment and putting the rest in a savings account. This means that your money is earning interest for two years before you have to pay for the sofa. It's called stoozing and if you can trust yourself its a good way to earn a bit of money.

[rachie004]

I enquired about the interest free credit dealy today and despite advertising 'getting a decision today', they'll get back to me in 7 days apparently as it needs to be processed :confused: Does that mean I don't qualify for it?

[Mist]

No not necessarily, it probably does have to be processed.

Some firms are cutting back on interest free deals though due to the media-fuelled "credit crunch".

Just check out to make sure you can actually get your item interest free, and that it's not an interest free period followed by a massive period of high %age payments.

[Randomgirl]

I bought some glasses on interest-free credit a few years ago. They were £363 and I paid about £100 up front and then the rest over ten months. I could have just bought them but as it was interest free it made sense to keep the money in my bank account earning me interest. Financially it made sense, the only thing was I found it a bit depressing months later when I was still paying for them, especially since my prescription changed after only six months so then I was paying for something that I didn't even use anymore. I don't feel this way about payments by direct debit though, I like paying for my contact lenses by DD for example.