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How to Avoid Promotional Credit Card Deferred Interest Charges

Updated on October 12, 2013

Many times in life you will find yourself wanting something that you can't afford. Maybe it's a shiny new ring, a new bedroom set, or a new computer. Whatever the item may be, it's out of your price range and you have no hope of getting it anytime soon. But then, as you are looking at said item, a sales person comes over and announces that in fact you can afford it for a low monthly rate and no interest for a year. How could you pass up such a delicious offer?

Let's pretend you bought a diamond ring for $3,000. You loyally pay the low monthly statement of $60.00 and feel great about your purchase. One year later, you notice that you've only paid $720 and your promotion is expiring. That means you need to come up with $2,280 within the next month or your deferred interest rate will not only be added to your balance, but each month new interest will be added on. Depending on your interest rate, this could be hefty amount. You could be looking at $600 being added to your account in just one month, with more money being added on every month. No wonder so many people find themselves in credit card debt.

So what do you do?

The easiest way to save yourself some stress and money is to find a balance transfer with O% APR and no annual fee. (Sometimes there is a percentage you have to pay according to how much you are transfering, but this amount is normally much less than the deferred interest charges you are running from.) There are many credit cards offering these balance transfers with no interest for a year. This is what you want. You've heard these words before, but this time, you're smarter about it and you plan ahead.

After successfully transferring your balance over and avoiding the hefty promotional balance, you need to do some simple math. Divide your balance (in this case, $2,280) by the total number of months you have without interest (in this case, 12) and you will get what you actually need to pay per month ($190). Congratulations, you have bought yourself another year. And by paying $190 a month, you know that you will have your balance paid off in time and will never have to worry about deferred interest again. (Tip: Don't use your credit card that you've transferred your balance from during this year.)

You don't have to be afraid of promotional deals. As long as you are smart about them, stay away from minimum monthly payments, and figure out how much you really need to be paying a month, they can be a great way to finance things you need.

Still afraid of promotional deals? Try saving up money first using these ten simple steps.


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