The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.
Highlights
- Deferred interest cards are often offered at the checkout of big retailers.
- With deferred interest offers, interest starts accruing immediately from the original purchase date, and if the balance isn't paid in full by the end of the promotional period, you will have to pay all accumulated interest.
- Deferred interest cards are risky but can be of great help when managed responsibly.
The holiday shopping season has never gone easy on shoppers' finances. As a result, many resort to borrowing in order to afford more or to save on holiday purchases. When managed responsibly, borrowing isn't necessarily a bad thing. But don't get blindsided by lucrative credit offers, especially the ones like credit cards at checkout.
When you shop online or in stores, you may often have the option to finance your purchases at checkout with the ability to spread payments over time rather than pay the full amount upfront. Such offers may mention a "0% APR" or "no interest," which you may misinterpret and not read the full terms of that "zero present financing."
No interest financing options that are offered by retailers usually come with a deferred interest. These deferred financing offers can sound like a sweet deal, but they almost always come with a big "IF."
Deferred interest offers are similar to credit cards with a 0% intro APR on purchases. However, deferred interest promotions are different in one key way: interest begins to accumulate from the date of purchase, but you are not liable for it if you pay the card balance within the promotional period. But if you are unable to pay off before the promotional period ends, you'll be charged interest that has accrued since day one.
Credit cards with deferred interest aren't completely bad. They are usually easy to get, especially if you have a long history of shopping with that retailer, so they can be helpful when you need some time to pay off your purchase.
If you want to use deferred interest offers to save money, then consider doing the following:
- Check your budget: make sure the offered promotional period is enough for you to pay off your purchase on time. You should know that you can afford to pay towards your credit card each month.
- Do your math: you may be offered several deferred financing options. If so, check the cost of your purchase and the length of the offered deferred period, then divide these two numbers to see what you'd have to pay each month to pay off your purchase in full by the end of the promotional period.
- Set up auto-pay: once you know how much you'll need to pay each month, set up those payments on auto-pay. That way, you'll pay everything off in time.
- Avoid using the card while you're paying off: store credit cards usually charge interest for any new purchases, which means your monthly payment will increase. This may make it difficult to pay off the original promotional offer in time.
Deferred interest financing offers are tricky to understand, but if used right, they can be a great help to you. The key is to read the terms and requirements of the offer, understand the mechanics behind it, and make sure you are on the right side of them. That's why it's better to know in advance whether you may need a store credit card and read its terms before you go on holiday shopping.
