Deferred Interest Calculator
Check a “no interest if paid in full” store-card promotion: how much back interest you will be charged if a balance is left at the end, and the monthly payment that avoids it.
How it works
Each month: accrued interest += balance × APR ÷ 12, then balance −= payment · if the balance is 0 by the last promo month, interest charged = 0, otherwise all accrued interest is charged · payment to avoid interest = purchase ÷ promo months
Deferred-interest promotions, common on store credit cards and medical credit cards, are not the same as a 0% APR offer. Interest accrues in the background from the purchase date at the card’s regular APR; if you pay the whole promotional balance by the deadline it is waived, but if even a small amount remains, all of the accrued interest is added at once. The CFPB warns that many shoppers are caught by this. The calculator estimates interest on the balance at the start of each month, a close approximation of the average-daily-balance method issuers use.
Worked example
A 1,500 purchase on a 12-month “no interest if paid in full” promotion at 26.99% APR, paid at 100 a month, leaves 300 unpaid at the end. Interest has accrued on the falling balance all year: (1,500 + 1,400 + … + 400) × 26.99% ÷ 12 = 11,400 × 2.249% = 256.41, and all of it is charged, so the balance jumps to 556.41. Paying 125 a month would have cleared it and avoided the charge.
Sources: CFPB — Issue Spotlight: The High Cost of Retail Credit Cards (deferred interest) · CFPB — Regulation Z §1026.53, allocation of payments
Frequently asked questions
How is deferred interest different from 0% APR?
With a true 0% APR, no interest is charged during the promotion and only the remaining balance starts accruing afterwards. With deferred interest, interest builds up from day one and is all charged if any balance remains at the end.
Why does the minimum payment not pay it off?
Minimum payments on deferred-interest plans are usually set below the amount needed to clear the balance in time, so following them alone often triggers the back interest.
How much should I pay each month?
At least the purchase divided by the number of promotion months — and plan to finish a month early in case of payment delays.
Do my payments go to the promotional balance?
In the US, payments above the minimum generally go to the highest-APR balance, but in the last two months of a deferred-interest period they must go to the promotional balance first. Other purchases on the card can complicate this.
Related calculators
Estimates for education and planning, not financial advice. Lenders’ contracts, fees, day-count and rounding rules differ — check the official cost disclosure (APR / TAE / CAT) and your loan agreement before deciding.