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October 23, 2020
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Credit cards that offer introductory interest-free periods and special financing options may seem like a quick and easy way to finance new purchases. But they sometimes also carry the risk of deferred interest charges. This means if you continue to carry a balance after the intro or special financing period ends, you will be hit with all the interest that would have accrued since the date you made your purchase — which can get very expensive.
Here’s what you need to know about deferred interest, including how to determine if your credit card carries it and how to avoid it.
Deferred interest, which is typically a promotion tied to store credit cards, allows cardholders to carry a balance from month to month without paying interest for a specified period of time.
If you don’t pay the credit card balance in full by the end of the promotional period, you will be responsible for all the interest that was waived during the promotional period, plus on any balance remaining.
For example, let’s say you purchase a sofa for $1,200 using a credit card that offers deferred interest for six months and an ongoing 22% APR (variable).
If you make payments of $200 each month for six months, you will not owe any interest payments, since the balance will have been paid in full within the promotional period.
However, if you don’t stick to the $200 a month payoff schedule and still have a balance at the end of the six months, you will be responsible for paying six months of interest — at an APR of 22% (variable) — on the original $1,200 you borrowed, plus be hit with interest charges on the remaining balance until it is paid off.
You can find out if your credit card charges deferred interest by scanning the terms and conditions of your cardmember agreement for the term “deferred interest,” “retroactive interest” or “no interest if paid in full.” The issuer may also include these terms in the fine print on the card’s landing page.
For example, the Amazon.com Store Card, which charges deferred interest, states the following on its landing page:
“Special Financing Offers: No interest if paid in full within 6, 12 or 24 months. Interest will be charged to your Amazon Store Card account from the purchase date if the promotional balance is not paid in full within 6, 12 or 24 months respectively. Minimum monthly payments required.”
Amazon allows consumers the choice of financing items for either 6, 12 or 24 months. The Amazon.com Store Card comes with a regular purchase APR of 27.49% variable.
The Lowe's Advantage Card, which also offers deferred interest, includes the following details on its special financing landing page:
“No Interest if Paid in Full Within Six Months: Offer applies to purchase or order of $299 or more on your Lowe’s Advantage Card. Interest will be charged to your account from the purchase date if the promotional purchase isn’t paid in full within six months. Minimum monthly payments required.”
The card has an ongoing purchase APR of 26.99% variable.
Deferred interest credit cards can be helpful since they can allow you to pay off a large purchase interest-free. But if you aren’t able to pay off the balance within the promotional period, you risk incurring extremely high deferred interest charges, which defeats the purpose of the special financing offer.
The following tips can help ensure that you avoid paying deferred interest charges:
Instead of a credit card that offers deferred interest charges, you may want to opt for a 0% intro APR card.
These credit cards allow you to carry a balance from month to month without paying interest anywhere from six to 21 months. If you have a remaining balance at the end of the promotional period, you will only be responsible for paying interest on any existing balance — and not retroactively, as you would with a deferred interest card.
Here is a sampling of some popular credit cards offering intro 0% APR promotions that do not involve deferred interest. For a more comprehensive list of cards, check out our Best 0% APR Credit Cards for Long Intro Periods.
The Wells Fargo Reflect® Card, for example, offers a promotional APR for close to two years. Cardholders receive a 0% intro APR up to 21 months from account opening on purchases, then a 16.74% - 28.74% variable APR.
The card also comes with a 0% intro APR up to 21 months from account opening on qualifying balance transfers, then a 16.74% - 28.74% variable APR applies. There’s a balance transfer fee of 3% for 120 days from account opening, then up to 5%; min: $5 applies.
If you need an extremely long time to pay off your balance, the Wells Fargo Reflect® Card may be ideal, since it offers one of the longest interest-free periods currently available.
Cardholders can receive an intro APR on purchases and balance transfers for a year and half. The card also offers an intro APR extension of up to three months with on-time minimum payments during the introductory and extension periods.
The card charges a $0 annual fee.
The Wells Fargo Reflect® Card, for example, offers a promotional APR for close to two years. Cardholders receive a 0% intro APR up to 21 months from account opening on purchases, then a 16.74% - 28.74% variable APR.
The card also comes with a 0% intro APR up to 21 months from account opening on qualifying balance transfers, then a 16.74% - 28.74% variable APR applies. There’s a balance transfer fee of 3% for 120 days from account opening, then up to 5%; min: $5 applies.
If you need an extremely long time to pay off your balance, the Wells Fargo Reflect® Card may be ideal, since it offers one of the longest interest-free periods currently available.
Cardholders can receive an intro APR on purchases and balance transfers for a year and half. The card also offers an intro APR extension of up to three months with on-time minimum payments during the introductory and extension periods.
The card charges a $0 annual fee.
The Chase Freedom Flex℠ offers a solid intro APR on purchases, as well as cash back on every purchase. The $0 annual fee card offers a 0% Intro APR on Purchases for 15 months, then a regular APR of 17.99% - 26.74% variable .
Cardholders earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter! Plus, earn 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% on dining and drugstores, and 1% on all other purchases. Additionally, new cardholders earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening!
Chase Freedom Flex℠ rewards can be redeemed for statement credits or direct deposits into most U.S. checking and savings accounts, gift cards, travel or Amazon.com merchandise.
If you want to finance a large purchase for more than a year, while also earning cash back rewards from the purchase, the Chase Freedom Flex℠ is a good option. Along with an easy-to-earn sign-up bonus, the card offers a generous rewards rate in popular spending categories that rotate quarterly, like gas and groceries, as well as in ongoing categories, like dining and drugstores.
Just know, you must activate the rotating categories each quarter in order to earn the bonus rewards rate on those purchases.
Additionally, the Chase Freedom Flex℠ offers 0% Intro APR on Balance Transfers for 15 months. After the intro period ends, the regular APR will be 17.99% - 26.74% variable . The balance transfer fee is either $5 or 3% of the amount of each transfer, whichever is greater in the first 60 days. Then, either $5 or 5% of the amount of each transfer, whichever is greater.
The Chase Freedom Flex℠ offers a solid intro APR on purchases, as well as cash back on every purchase. The $0 annual fee card offers a 0% Intro APR on Purchases for 15 months, then a regular APR of 17.99% - 26.74% variable .
Cardholders earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter! Plus, earn 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% on dining and drugstores, and 1% on all other purchases. Additionally, new cardholders earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening!
Chase Freedom Flex℠ rewards can be redeemed for statement credits or direct deposits into most U.S. checking and savings accounts, gift cards, travel or Amazon.com merchandise.
If you want to finance a large purchase for more than a year, while also earning cash back rewards from the purchase, the Chase Freedom Flex℠ is a good option. Along with an easy-to-earn sign-up bonus, the card offers a generous rewards rate in popular spending categories that rotate quarterly, like gas and groceries, as well as in ongoing categories, like dining and drugstores.
Just know, you must activate the rotating categories each quarter in order to earn the bonus rewards rate on those purchases.
Additionally, the Chase Freedom Flex℠ offers 0% Intro APR on Balance Transfers for 15 months. After the intro period ends, the regular APR will be 17.99% - 26.74% variable . The balance transfer fee is either $5 or 3% of the amount of each transfer, whichever is greater in the first 60 days. Then, either $5 or 5% of the amount of each transfer, whichever is greater.
With The Amex EveryDay® Credit Card from American Express, cardholders receive an intro APR of 0% introductory apr for the first 15 months from the date of account opening. on purchases and balance transfers. After that, an ongoing APR of 15.24% to 26.24% variable applies.
Additionally, the card offers 2x points at U.S. supermarkets, on up to $6,000 per year in purchases (then 1x), and 1x points on other purchases. New card members also earn 10,000 Membership Rewards® points after you use your new Card to make $2,000 in purchases in your first 6 months.
The The Amex EveryDay® Credit Card from American Express has a $0 annual fee.
If you need immediate access to a line of credit, you may want to consider a card that offers an instant credit card number, like The Amex EveryDay® Credit Card from American Express.
Immediately upon approval — and as long as American Express is able to instantly authenticate your identity — you can receive access to an instant card number, which can be used virtually anywhere American Express is accepted. So instead of waiting several days for your physical card to arrive in the mail, you can make charges on your The Amex EveryDay® Credit Card from American Express right away.
Just know, you may not have access to your full credit line until your physical card arrives.
With The Amex EveryDay® Credit Card from American Express, cardholders receive an intro APR of 0% introductory apr for the first 15 months from the date of account opening. on purchases and balance transfers. After that, an ongoing APR of 15.24% to 26.24% variable applies.
Additionally, the card offers 2x points at U.S. supermarkets, on up to $6,000 per year in purchases (then 1x), and 1x points on other purchases. New card members also earn 10,000 Membership Rewards® points after you use your new Card to make $2,000 in purchases in your first 6 months.
The The Amex EveryDay® Credit Card from American Express has a $0 annual fee.
If you need immediate access to a line of credit, you may want to consider a card that offers an instant credit card number, like The Amex EveryDay® Credit Card from American Express.
Immediately upon approval — and as long as American Express is able to instantly authenticate your identity — you can receive access to an instant card number, which can be used virtually anywhere American Express is accepted. So instead of waiting several days for your physical card to arrive in the mail, you can make charges on your The Amex EveryDay® Credit Card from American Express right away.
Just know, you may not have access to your full credit line until your physical card arrives.
With the Discover it® Student Cash Back, cardholders receive a 0% Intro APR for 6 months on purchases. After that, a regular 15.99% - 24.99% Variable APR applies.
Cardholders earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.. Plus, get the following sign-up bonus: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you've earned at the end of your first year! So you could turn $50 cash back into $100. Or turn $100 into $200. There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
The card has a $0 annual fee.
If you’re a student who needs buy a laptop, books or other larger purchases and pay them off over time, the Discover it® Student Cash Back is a good option. Along with offering points on every purchase, the card comes with an interest-free period on purchases for half a year — which is rare for a student credit card.
The card also offers a 10.99% Intro APR for 6 months on balance transfers, then 15.99% - 24.99% Variable APR.
The Discover it® Student Cash Back is intended for students with fair/limited credit. Just know, to apply, you need to be at least 18 years old, have a U.S. address, have a Social Security number and show proof of education.
With the Discover it® Student Cash Back, cardholders receive a 0% Intro APR for 6 months on purchases. After that, a regular 15.99% - 24.99% Variable APR applies.
Cardholders earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.. Plus, get the following sign-up bonus: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you've earned at the end of your first year! So you could turn $50 cash back into $100. Or turn $100 into $200. There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
The card has a $0 annual fee.
If you’re a student who needs buy a laptop, books or other larger purchases and pay them off over time, the Discover it® Student Cash Back is a good option. Along with offering points on every purchase, the card comes with an interest-free period on purchases for half a year — which is rare for a student credit card.
The card also offers a 10.99% Intro APR for 6 months on balance transfers, then 15.99% - 24.99% Variable APR.
The Discover it® Student Cash Back is intended for students with fair/limited credit. Just know, to apply, you need to be at least 18 years old, have a U.S. address, have a Social Security number and show proof of education.
| Credit card | Best for | Intro APR on purchases | Regular purchase APR |
|---|---|---|---|
| Wells Fargo Reflect® Card | Long intro APR on purchases | 0% intro APR up to 21 months from account opening | 16.74% - 28.74% variable APR |
| Chase Freedom Flex℠ | Cash back rewards | 0% Intro APR on Purchases for 15 months | 17.99% - 26.74% variable APR |
| The Amex EveryDay® Credit Card from American Express | Instant access to credit | Intro 0% introductory APR for the first 15 months from the date of account opening. on purchases | 15.24% to 26.24% variable APR |
| Discover it® Student Cash Back | Students | 0% Intro APR for 6 months on purchases | 15.99% - 24.99% Variable APR |
The information related to the The Amex EveryDay® Credit Card from American Express has been independently collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication.
The above offers and/or promotions may have since changed, expired, or is no longer available. Check the Issuers’ website for more details.
