Deferred interest
A promotional financing structure where interest accrues silently from day one and is charged retroactively if any balance remains at the deadline.
Deferred-interest financing is a promotional structure often found on store cards and "no interest if paid in full in 12 months" retail offers. During the promo, no interest is added to the monthly bill — but interest is quietly accruing the whole time, at the card's regular APR, on the declining balance.
If the entire balance is paid off before the deadline, the accrued interest is waived and the offer really did cost nothing. If any balance remains, even a small one, all of the accrued interest is added at once, computed on the balances carried across the whole period.
A worked example. A $1,200 purchase on a 12-month deferred-interest offer at 26% APR, paid $95 a month, leaves $60 owing after twelve payments. That $60 is not what triggers a few dollars of interest — the card adds roughly $176, the interest that accrued all year. Deferred-interest offers are legally distinct from true 0% promotions, where interest simply starts on any remainder at the end of the promo.
Plumb is financial education, not financial, investment, tax, or legal advice.