Deferred interest

How it is worked out

During the promotion no interest is charged, so every payment reduces the balance. Interest is still worked out each month on the balance owed at the start of that month, at the card's standard rate, and held back. At the deadline:

monthly rate     = annual rate ÷ 12
interest held    = sum over each month of (balance at start of month × monthly rate)
balance at end   = amount − payments made during the promotion

if balance at end = 0:  nothing is added
otherwise:              all interest held is added at once
payment to clear = amount ÷ months, rounded up to the cent

Worked example

$3,200 at 26.99%, a 12-month promotion, $250 paid each month.

paid during promotion = $3,000.00
still owed at the end = $200.00
interest held back    = $492.57
added at the deadline = $492.57
payment to clear      = $266.67 a month

Limits

• Card issuers work interest out on daily balances and actual payment dates, so the figure on a statement depends on your balance and payment history. This is an estimate.
• It assumes one payment at the end of each month, no new purchases on the card, and no fees.
• If the card holds other balances, how extra payments are applied can change the result. The card issuer can say how payments are applied.
• After the deadline, interest is also charged going forward on whatever is still owed. That is not included here.