1. What is Deferred Interest?

Deferred interest is interest that accrues during a promotional period but isn't charged unless the balance isn't paid in full by the end of the period. If not paid in time, all accumulated interest is added to the balance.

2. How Does the Calculator Work?

The calculator uses the deferred interest formula:

Where:

• \( I \) — Deferred interest amount
• \( P \) — Principal balance
• \( R \) — Monthly interest rate (APR / 12)

Explanation: The formula calculates the interest that would be charged for one month if the promotional period ends without full payment.

3. Importance of Calculating Deferred Interest

Details: Understanding potential deferred interest helps consumers make informed decisions about promotional financing offers and avoid unexpected charges.

4. Using the Calculator

Tips: Enter your current principal balance and the APR (annual percentage rate) of your credit card. The calculator will show the deferred interest that would be charged if the balance isn't paid in full by the end of the promotional period.

5. Frequently Asked Questions (FAQ)

Q1: What happens if I pay the full balance during the promotional period?
A: If you pay the full balance within the promotional period, no interest will be charged.

Q2: Is deferred interest the same as regular credit card interest?
A: No, deferred interest is typically higher and is charged retroactively if the balance isn't paid in full by the deadline.

Q3: How can I avoid paying deferred interest?
A: Pay the entire balance before the promotional period ends. Even a small remaining balance can trigger the full deferred interest charge.

Q4: Are there alternatives to deferred interest offers?
A: Some cards offer true 0% APR promotions where interest doesn't accrue during the promotional period.

Q5: Does this calculator account for multiple months?
A: This shows monthly interest. For multiple months, multiply the result by the number of months in the promotional period.