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Understanding Deferred-Interest Plans

Today, deferred-interest promotional plans seem to be everywhere – especially around bigger ticket items such as jewelry, furniture and appliances – because of their broad appeal to consumers.

What does "deferred interest" mean?

These promotional plans offer you the opportunity to make a purchase without paying interest – as long as you pay off the purchase balance by the plan's expiration date.  

A purchase on a deferred-interest promotional plan will accumulate, or accrue, interest each month based on your APR (Annual Percentage Rate). If you pay off the balance in full by the time the promotional plan expires, you don't have to pay any of that accumulated interest. The length of promotional plans can vary but many are 12, 18 or 24 months.

Here's an example

Imagine purchasing a ring for $1,200. By using a deferred-interest promotional plan offered through a credit card, you get to enjoy the ring immediately. Plus, if you pay it off by the plan's expiration date, you won't pay any interest on the money you borrowed. It's a great plan – and a great win for you.

The benefit: Empowerment

Deferred-interest promotional plans are all about giving you choice, control and clarity.

  • Choice. Promotional plans give you the option to make a purchase now and enjoy it right away. You get to borrow the money upfront and pay it off interest-free – if you pay off the balance by the expiration date.
  • Control. You can choose to make smaller payments in some months and larger payments in others, such as if you get a tax refund or year-end bonus.
  • Clarity. Monthly credit card billing statements clearly show the remaining purchase balance. They also draw special attention to the plan's end date as it draws closer.

Worth mentioning again

  • Expiration dates. Deferred-interest promotional plans may be a great option for you, but remember, if you don't pay off your balance by your plan's expiration date, you will also be required to pay all the interest that has accrued over the time of the plan. And this could mean increased required minimum payments, too.
  • Monthly statements. Whether you receive your monthly statements online or in the mail, be sure to review yours when they arrive. They clearly outline how much you owe each month, the total remaining balance, and how much time is left before the expiration date arrives.

If you have questions about your promotional plan, please call us at the number on your monthly statement. At Comenity, we're always happy to help.

This page and the information contained herein is for educational purposes only. The information is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any product, service or strategy to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any links to other websites are included for your convenience only. Comenity does not endorse any product or service, and is not responsible for the accuracy or reliability of the information made available through such sites.