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What’s a Deferred Interest Credit Card?

Last Updated: December 17, 2023
4 min read

Key points about: deferred interest credit cards

  1. Deferred interest credit cards can help users minimize interest payments by postponing interest charges until a certain date.

  2. A deferred interest card can be helpful if you plan to pay off the credit card balance before the interest payment deferral period ends.

  3. Deferred interest offers are not the same as 0% APR (Annual Percentage Rate) offers.

Deferred interest credit cards allow you to carry a balance from month-to-month, possibly without paying interest. Any balance you hold over time does accrue interest, but you will only owe that interest if you don’t pay off the balance before a certain date when the deferred interest period expires.

In the event you don’t pay your balance before the deferred interest period is up, all the interest you’ve accrued over the given time period will be added to your balance.

Deferred interest cards may have several benefits, but if you don’t know the ins and outs of how these cards work, you could end up paying a lot more in interest than you planned.

What’s a deferred interest credit card and how does it work?

Much like deferred interest loans, or a deferred payment on a student loan, a deferred interest card is a card with a delayed interest payment.

Using a credit card that defers interest allows you to pay off purchases over time without having to pay interest, so long as you pay off the balance before the deferred interest expiration date.

Say you’d like to purchase a television that costs $1,000, but you won’t have enough cash to buy it outright for another two months. If you purchase the TV on a credit card that defers interest for 12 months with a 17% APR and hold that balance for two months, roughly $28.50 in interest will accrue, but you’re not technically liable for this interest charge just yet. You’ll only owe interest if you don’t pay off your balance before the 12-month deferred interest promotion is up.

So long as you pay off the balance within those 12 months, you would have essentially purchased the TV with an interest-free loan. On the other hand, if you forget about the deferred interest expiration date and go past it, you’ll end up owing $1,000 (minus any payments you made) plus 12 months of interest.

Just remember to read the fine print with any deferred interest offer including the deferred interest financing details, payment schedules for if you don’t pay off the balance by the deadline, and minimum payment requirements. A deferred interest card will only save you money if you pay attention to the explicit rules that determine when and how interest is charged.

Tips for managing deferred interest credit cards

With any credit card, if your goal is to save money, you should avoid paying interest whenever possible. This mentality is no different with a deferred interest card, though it can be a bit easier to spend beyond your means when you know that the interest being added to your account doesn’t actually show up on your balance month-to-month.

One way to curb your spending is to keep track of your deferred interest balance and how much interest is accruing along with it. Simply knowing how much money you owe — and how much interest you could owe — may be enough to prevent additional spending. This information will appear on your monthly credit card statement with your accrued expenses and is worth keeping track of.

Another strategy that may help is setting automated payments for at least the minimum payment due. Deferred interest cards may cancel the deferral period if you miss payments or don’t make the minimum payment, an innocent mistake that may end up costing hundreds of dollars in interest. These penalties paired with penalty APRs will put you in an even bigger hole and could reflect on your credit report and negatively impact your credit score.

It’s also wise to set a calendar reminder for a few weeks before your card’s deferred interest period ends. This way, the date will be on your radar — even if you can’t afford to make a payment for the entire amount. Then, you'll have some time to calculate the retroactive interest for after the deferment period. With that information you can develop a payment plan to pay off the remaining balance over time after the promo period has ended.

The pros of introductory APR vs. deferred interest

While deferred interest means there’s a period during which interest isn’t charged on your monthly payment, if you don’t pay off your statement balance within that period, you’ll then be charged all the accrued interest that accumulated during the deferral period at the interest rate stipulated in the terms.

Did you know?

Introductory or promotional offers differ from deferred interest offers. When a credit card features an introductory or promotional period of 0% APR on purchases, no interest is charged on purchases during that period. When the introductory or promotional period ends, any remaining balance will begin to accrue interest from that date forward at the standard purchase APR. There’s no additional interest related to the intro period.

How to avoid credit card interest charges

The simplest way to avoid interest charges on purchases altogether is to pay your statement balance in full every month. Many credit card issuers have a grace period, which means that you will not pay interest on new purchases if you pay your statement balance each month in full.

Using a credit card featuring an introductory 0% APR for a limited time is another way to make purchases without incurring interest. However, the balance you carry when the introductory period expires will have interest charges applied. When using a card featuring an intro 0% APR, it is important to note the standard purchase APR that will be applied when the promo period expires.

Does Discover feature credit cards with deferred interest?

No, Discover does not offer credit cards with deferred interest. However, you can review Discover’s current credit card offers to find those that may include an introductory APR.

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