 TITLE: What Is Deferred Interest? CONTENT: How Does Deferred Interest Work?\n--------------------------------\nWhen you shop for a major purchase, such as electronics, furniture or fitness equipment, a retailer may try to sweeten the deal by offering a zero-interest financing offer in the form of a loan or credit card. Some doctors and dentists also offer no-interest financing for procedures. While this type of offer can sound tempting, it usually has a catch and should be approached carefully.\nDeferred interest loans come with a set term, such as three years, during which time you'll be charged no interest. Here's the issue: The deal is only good if you pay off the loan in full by the end of that period. If you aren't able to pay it in full by then, perhaps due to an unexpected loss of income, you can get hit with all the interest you otherwise would have avoided. Some financing offers also revoke the deferred interest and retroactively charge you interest if you make even one late payment.\nIf your deferred interest comes due, the amount you'll be charged could be based on the entire balance of the loan from the start—not just your remaining balance. This can mean a large lump sum that's added to your loan balance. If the regular interest rate is high, which it often is with these offers, the lump sum amount can be shocking. This is one way lenders make money on these \"no-interest\" deals, because while many dutifully pay off their loan in full and on time, some don't.\nYou're most likely to see these deferred interest loans and credit cards at retailers, and you can recognize them with phrases like \"same as cash,\" \"no interest if paid in full\" or \"no interest for six months.\" END