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What is Deferred Interest?

*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated October 23, 2020 . Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

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.

What is deferred interest?

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.

Do I have a deferred interest credit card?

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 26.74% 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.

How to avoid deferred interest charges

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:

  • Pay your balance in full before the special financing period ends. This lets you benefit from the interest-free offer without being hit with deferred interest charges. Calculate what your monthly payments need to be in order to pay off the loan before the deferred interest payments kick in. Be aware that this amount will likely be much more than the minimum payment required by the issuer each month.
  • Pay your bill on time each month. If you fail to pay at least the minimum amount due each month — in addition to potentially having a negative impact on your credit score — the lender may end the deferred period prematurely and charge you the full amount of interest.
  • Keep spending to a minimum. Many credit cards that charge deferred interest offer various special financing options each time you make a qualifying purchase. The interest-free periods and ability to pay over time may tempt you to make numerous charges, which could cause you to fall into debt. Therefore, we recommend using special financing options sparingly.
  • Set a reminder two months before your special financing period ends. Once you have two months remaining, evaluate your balance to see if you need more time to pay off your debt. If you can’t afford to pay your balance in full before the special financing period ends — you may want to transfer the debt to a balance transfer card that offers a 0% intro APR period for more than a year and no deferred interest.

How about a 0% intro APR credit card instead?

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.

Best For Long intro APR period

Wells Fargo Reflect<sup>®</sup> Card

Wells Fargo Reflect® Card

Apply Now
on Wells Fargo's secure site
Intro Purchase APR 0% intro APR up to 21 months from account opening
Annual Fee $0
Regular Purchase APR 15.24% - 27.24% variable APR

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 15.24% - 27.24% variable APR.

The card also comes with a 0% intro APR up to 21 months from account opening on qualifying balance transfers, then a 15.24% - 27.24% 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.

  • Cellphone protection
  • My Wells Fargo Deals
  • Free FICO credit score access
  • Card account activity alerts

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 15.24% - 27.24% variable APR.

The card also comes with a 0% intro APR up to 21 months from account opening on qualifying balance transfers, then a 15.24% - 27.24% 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.

  • Cellphone protection
  • My Wells Fargo Deals
  • Free FICO credit score access
  • Card account activity alerts

Best For Cash back rewards

Chase Freedom Flex℠

Chase Freedom Flex℠

Apply Now
on Chase's secure site
Intro Purchase APR 0% Intro APR on Purchases for 15 months
Annual Fee $0
Regular Purchase APR 16.49% - 25.24% Variable

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 16.49% - 25.24% 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 16.49% - 25.24% 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.

  • Purchase protection
  • Extended warranty protection
  • Trip cancellation and interruption insurance
  • Cellphone protection
  • Auto rental collision damage waiver
  • Travel and emergency assistance services
  • 24/7 fraud monitoring

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 16.49% - 25.24% 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 16.49% - 25.24% 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.

  • Purchase protection
  • Extended warranty protection
  • Trip cancellation and interruption insurance
  • Cellphone protection
  • Auto rental collision damage waiver
  • Travel and emergency assistance services
  • 24/7 fraud monitoring

Best For Instant access to credit

The Amex EveryDay® Credit Card from American Express

Highlights
  • Earn 10,000 Membership Rewards® points after you use your new Card to make $1,000 in purchases in your first 3 months.
  • Low intro APR: 0% for 15 months on purchases, then a variable rate, currently 14.49% to 25.49%.
  • 2x points at U.S. supermarkets, on up to $6,000 per year in purchases (then 1x)
  • 1x points on other purchases.
  • Use your Card 20 or more times on purchases in a billing period and earn 20% more points on those purchases less returns and credits.
  • Over 1.5 million more places in the U.S. started accepting American Express® Cards in 2017.
  • No annual fee.
  • Terms Apply.

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 14.49% to 25.49% 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.

  • Access to American Express Experiences
  • Ability to shop with Membership Rewards points
  • Terms apply

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 14.49% to 25.49% 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.

  • Access to American Express Experiences
  • Ability to shop with Membership Rewards points
  • Terms apply
The information related to the The Amex EveryDay® Credit Card from American Express has been collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply.

Best For Students

Discover it<sup>®</sup> Student Cash Back

Discover it® Student Cash Back

Apply Now
on Discover's secure site
Intro Purchase APR 0% Intro APR for 6 months on purchases
Annual Fee $0
Regular Purchase APR 14.49% - 23.49% Variable APR

With the Discover it® Student Cash Back, cardholders receive a 0% Intro APR for 6 months on purchases. After that, a regular 14.49% - 23.49% Variable APR applies.

Cardholders earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, 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 14.49% - 23.49% 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.

  • Free Social Security number alerts
  • Ability to freeze card
  • $0 fraud liability
  • 100% U.S.-based, 24/7 customer service

With the Discover it® Student Cash Back, cardholders receive a 0% Intro APR for 6 months on purchases. After that, a regular 14.49% - 23.49% Variable APR applies.

Cardholders earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, 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 14.49% - 23.49% 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.

  • Free Social Security number alerts
  • Ability to freeze card
  • $0 fraud liability
  • 100% U.S.-based, 24/7 customer service

Side-by-side comparison of 0% intro APR cards

Credit cardBest forRegular purchase APR
Wells Fargo Reflect® CardLong intro APR on purchases0% intro APR up to 21 months from account opening 15.24% - 27.24% variable APR
Chase Freedom Flex℠Cash back rewards0% Intro APR on Purchases for 15 months16.49% - 25.24% variable APR
The Amex EveryDay® Credit Card from American ExpressInstant access to creditIntro 0% introductory APR for the first 15 months from the date of account opening. on purchases14.49% to 25.49% variable APR
Discover it® Student Cash BackStudents0% Intro APR for 6 months on purchases14.49% - 23.49% 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.

Tracy Brackman

  • Expertise: Credit cards, credit scoring, personal finance
  • Education: Ohio State University, Florida International University

 


Tracy Brackman is a senior editor and credit card expert at LendingTree, where she writes and edits educational pieces on credit card-related topics and personal finance using her 12+ years of experience in the field.

Before joining LendingTree in 2019, Tracy worked as a products editor for CreditCards.com, where she developed the credit card products section and created content focused on breaking credit card news.

Prior to that, she worked as a product information manager for Bankrate, where she managed the financial and credit card product details and maintained compliance for two affiliate networks, as well as Bankrate-owned and operated sites.

She began working in the credit card space in 2009 as the editorial department manager for FlexOffers, an affiliate marketing company.

Tracy studied marketing at the Ohio State University and Florida International University.

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The above offers and/or promotions may have since changed, expired, or is no longer available. Check the Issuers’ website for more details.