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Deferred interest credit cards: What are they?

Make a purchase now and pay it off later without interest.


Fact checked

Store credit cards often offer a feature known as “deferred interest.” Similar to cards with an introductory APR, this feature can make large purchases easier to pay off over time.

However, deferred interest credit cards have a few important differences you should understand before using them.

What is deferred interest?

Deferred interest, also known as special financing, is an option provided by retailers that lets you make purchases now and pay them off later without interest.

What is a credit card with deferred interest?

A deferred interest credit card is a credit card that allows you to make purchases under the terms of deferred interest. Depending on the card, you can get an interest-free period between six and 48 months.

Deferred interest vs. 0% APR on purchases

The major difference to note with a deferred interest plan is how the interest-free period works. If you fail to pay your full balance before the interest-free period ends, you’ll be charged interest on the full purchase for each month of the deferred interest plan.

For example: if you make a $2,000 purchase with a 12-month deferment period, you’ have 12 months to pay off that purchase interest-free. But if you fail to pay off that purchase in full, you’ll be charged 12 months of interest on that initial purchase amount.

If you make the same purchase on a 0% APR card and fail to pay it off, you’ll only start accruing interest on what’s remaining on your balance after your intro period ends.

Benefits of deferred interest cards

Aside from the obvious benefit of saving money on interest, you could also enjoy:

  • Repeated deferred interest financing option.
    With a 0% intro APR credit card, you enjoy no interest on your purchases for a limited time only. Deferred interest is usually offered repeatedly. For example, once you pay off your balance, you can make another purchase and use the no-interest period again and again.
  • No annual fee.
    This type of cards often costs nothing to own.
  • Store benefits.
    Other benefits include rewards on your purchases, discounts or free shipping.
  • Low credit score requirements.
    When credit cards are concerned, retailers aren’t usually as picky as banks are. In most cases, you can get a store card with a poor or fair credit score.

What to watch out for

Although deferred interest is a convenient way to pay off your large purchases, there are some drawbacks to consider.

  • May accrue interest if not paid in full.
    Read the card’s terms and conditions as some retailers may require you to pay the full interest from the day you made the purchases if you don’t pay off your balance in full before the interest period ends.
  • High-interest rates.
    Aside from the deferred interest options, other purchases may accrue high interest if not paid in full before the due date.
  • Higher minimum payment.
    In most cases, you will have to make a certain minimum payment each month, which is often higher than the standard 1% to 3% other credit cards offer.
  • May not use the card elsewhere.
    Since retailers are typically the ones who offer deferred interest credit cards, you may not be able to use the card elsewhere to make purchases.

Compare credit cards with 0% APR on purchases

If you’re looking for an interest-free option, check out some available 0% APR credit card options. Select your credit score and click Show cards to start comparing.

Name Product Purchase APR Balance transfer APR Annual fee Filter values
Blue Cash Everyday® Card from American Express
0% intro for the first 15 months (then 13.99% to 23.99% variable)
Get 3% cash back on groceries on up to $6,000 annually (then 1%) with no annual fee. This is a simple and effective rewards card. Rates & fees
Chase Freedom Flex℠
0% intro for the first 15 months (then 14.99% to 23.74% variable)
14.99% to 23.74% variable
Get up to 5% cashback in rotating and newly added everyday categories. The refreshed Freedom Flex card has lots of earning potential.
Citi® Diamond Preferred® Card
0% intro for the first 18 months (then 14.74% to 24.74% variable)
0% intro for the first 18 months (then 14.74% to 24.74% variable)
An impressive 18 months intro APR on balance transfers and purchases, as well as no annual fee make this one of the top 0% APR cards available.
Chase Freedom Unlimited®
0% intro for the first 15 months (then 14.99% to 23.74% variable)
14.99% to 23.74% variable
This solid 1.5% cashback card gets even better with the addition of up to 5% back in categories like travel, drug stores and dining.
Citi® Double Cash Card
13.99% to 23.99% variable
0% intro for the first 18 months (then 13.99% to 23.99% variable)
Earn up to 2% on every purchase with no annual fee. This is the highest flat-rate cashback card on the market.

Compare up to 4 providers

Who offers deferred interest?

Retailers that offer store credit cards are often the ones who provide deferred interest on purchases made at their store. Here are some of the more popular deferred interest card options:

  • Amazon Prime Store Card Credit Builder
  • Sam’s Club® Mastercard®
  • PayPal Credit

Bottom line

If you often shop at retailers who offer store cards with deferred interest, you could save money on your purchases. Be sure to pay your full balance before the deferred interest period ends to make the card worth it.

Alternatively, a 0% intro APR credit card could be worth considering, especially if you want a card you can use everywhere.

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