The deferred interest trap
"No interest if paid in full in 12 months" sounds like 0% APR. It isn't. With deferred interest, interest accrues daily at 20–30% APR from the day you buy. It is only waived if the entire balance is paid off before the promotion ends. Miss the deadline by a dollar or a day and every cent of that back-interest lands on your statement at once.
How the trap works
- Interest accrues daily at 20–30% APR
- Interest is "waived" only if paid in full on time
- Miss the deadline and retroactive interest is charged on the original balance
- The minimum payment is not the payoff payment
- One late payment can void the promotion
Deferred interest vs. true 0% APR
With a true 0% APR offer, zero interest accrues during the promo; the standard APR applies only to the balance left afterward, and nothing is charged retroactively. True 0% offers are usually on major credit cards; deferred interest is common on store cards and retail financing. The disclosure will say "0% APR," not "no interest if paid in full."
Red flags on the receipt
If you see "no interest if paid in full," "deferred interest," or "promotional balance" on a store-card or financing receipt, slow down: divide the balance by the number of months left and pay at least that, not the minimum.
The escape plan
Use the interactive calculator on this page to see your payoff-by date and how much interest is at risk.