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What Is Deferred Interest?

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How Do Deferred-Interest Promotional Plans Work?

Today, deferred-interest promotional plans are popular with bigger ticket items such as jewelry, furniture, and appliances. Deferred interest appeals to consumers because it makes it easier and faster to purchase expensive items. It’s important to understand a deferred interest promotional plan contract before signing up. Read on to learn more about deferred interest, including benefits and stipulations.


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 annual percentage rate (APR). If you pay off the balance in full by the time the promotional plan expires, you don’t have to pay the accumulated interest. The length of promotional plans can vary but many are 12, 18 or 24 months.


Understanding Deferred Interest Plans

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 of Deferred Interest: 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. For example, if you receive a tax refund or year-end bonus, you can use that income to make a larger payment. However, if you only pay the minimum due every month throughout the plan’s duration, it’s likely you won’t pay off the balance in time and will be responsible for the accrued interest.
  • Clarity. Monthly credit card billing statements clearly show the remaining purchase balance. They also draw special attention to the plan’s end date.


Ways to Avoid Paying Deferred Interest

Some promotional plans are too good to pass up. Here are some tips to help you avoid paying interest on your next qualifying purchase.

  • 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 read them right away. Your statement clearly outlines how much you owe each month, the total remaining balance, and how much time remains before the expiration date.


At Comenity, we’re always happy to help. If you have questions about your promotional plan, please contact us online or call us at the number on your monthly statement or on the back of your credit card.