What deferred interest means
Many store credit cards offer "no interest if paid in full within 12 months" (or 6, 18 or 24 months). That is a deferred interest promotion, and it works very differently from a 0% intro APR. Interest is counted from the day you buy, every month, at the card's regular APR. If you pay the whole promotional balance by the end date, that interest is waived. If even a small amount is left, the interest from the whole period can be charged to your account at once.
Federal Regulation Z describes deferred interest as finance charges, accrued on balances or transactions, that are waived or refunded if those balances are paid in full by a specified date. Ads for these offers must say "if paid in full", and they must explain that interest will be charged from the date you became obligated for the balance if it is not paid in full within the promotion period (12 CFR 1026.16(h)).
Deferred interest vs 0% intro APR
| Deferred interest ("no interest if paid in full") | 0% intro APR | |
|---|---|---|
| During the promotion | Interest is counted in the background but not charged yet. | No interest is counted. |
| Paid in full in time | No interest. | No interest. |
| Balance left at the end | Interest from the purchase date can be charged at once. | Interest starts only on the balance left, from then on. |
How the calculator works
- Each month, interest = the balance you still owe × APR ÷ 12. Your payment then lowers the balance. This is a simple version of the daily balance method card issuers use.
- If the balance reaches zero before the end of the promotion, no interest is charged.
- If not, the calculator adds up the interest from every month and shows it as the amount charged when the promotion ends.
- "Pay this a month to clear it in time" = purchase ÷ number of months.
- For comparison, it shows what a true 0% intro APR card would charge in the first month after the intro period on the same leftover balance.
An example
You buy a $1,200 laptop with "no interest if paid in full in 12 months" on a card with a 29.99% APR, and you pay $80 a month. After 12 months you have paid $960 and $240 is still owed. Because the balance was not paid in full, about $227.92 of interest from the whole year can be added at once, so you would owe about $467.92. Paying $100 a month instead would clear the balance in time with no interest. On a true 0% intro APR card, the same $240 left over would cost about $6 in interest the next month.
How your payments are applied
If your card has other balances at a higher APR, payments above the minimum normally go to the highest-APR balance first. For a deferred interest balance, the rule changes near the end: during the last two billing cycles before the promotion expires, any amount you pay above the minimum must go first to the deferred interest balance (12 CFR 1026.53). Paying it off earlier is still the safest plan, and you can also ask the card issuer to apply extra payments to the promotional balance.
Frequently asked questions
Is "no interest if paid in full" the same as 0% APR?
No. With deferred interest, interest is counted from the purchase date and can be charged all at once if any of the promotional balance is left at the end. With a 0% intro APR, no interest is counted during the intro period.
Is the minimum payment enough to avoid the interest?
Not always. The minimum payment may be too small to pay off the balance before the promotion ends. Divide the purchase by the number of months to find what you need to pay.
What if I pay off almost all of it?
If any of the promotional balance is left at the end, interest from the purchase date can still be charged. The calculator shows how much.
Where do I find the APR and the end date?
In the card's terms and on your monthly statement, which shows the promotional balance and when the promotion ends.
Is my information saved?
No. The numbers stay in your browser and are not sent to us.