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Big purchases can be complex, and sometimes the need for one comes without any warning. Promotional financing can make large purchases more affordable and easier to pay for.
Synchrony Bank-issued credit cards may offer one or more of these types of promotional financing offers: deferred interest, reduced interest with fixed monthly payments, and no interest with equal monthly payments. These offers can help you spread the price of your large purchase over a defined promotional period.
The benefits of each type of promotional financing vary, and the terms for each vary from offer to offer. Keep reading to learn about promotional financing and discover which type may be right for you.
1. Deferred interest promotional financing
What is deferred interest?
Deferred interest promotional financing is what it sounds like – it offers you the opportunity to pay for a purchase over time without interest being charged to your account, provided that you pay the full amount of your promotional purchase during the promotional period. In other words, a deferred interest financing option gives you a set amount of time to pay off a purchase without paying interest.
However, if the promotional purchase is not paid in full by the end of the promotional period, accrued interest will be charged. In fact, interest will be charged on the full purchase price going back to the date of purchase, so it’s important to keep track of when payments are due and pay your promotional purchase in full before the end of the promotional period.
Key benefits of deferred interest
With deferred interest promotional financing, you can buy what you need sooner and pay for it over time.
The primary benefit of deferred interest promotional financing is the opportunity to avoid interest. Just be sure to pay off the entire promotional purchase within the promotional period to get the benefit of this type of promotional financing.
How deferred interest works
With a deferred interest offer, although interest accrues (adds up) on your account from the purchase date, it is only charged if you do not pay off your promotional balance within the promotional period.
Let's take a look at an example of how this works when a customer has no other balances on their account except a deferred interest promotional purchase.
Scenario: A customer makes a $1,200 purchase with a 12-month deferred interest financing option. Months 1-11, the customer makes minimum payments, varying from $30 to $42 each month. Then, in month 12, they pay $806 to cover the remaining balance and avoid paying any interest on the balance.
Alternatively, the customer could pay above the monthly minimum required amount, spreading out equal payments of $100 throughout the 12 months of their promotional period.
It’s important to note that “deferred interest” does not mean “deferred payments.” With a deferred interest promotional financing offer, you must still make the minimum monthly payments on your account.
2. No interest with equal monthly payments
What is no interest financing with equal monthly payments?
Another type of promotional financing is called no interest financing with equal monthly payments, or equal pay financing.
Equal pay financing comes with 0% APR, and monthly payments will be the same amount throughout the duration of the promotional period.
How does no interest with equal monthly payments work?
First off, what is an APR? “APR” stands for “annual percentage rate” and is the yearly interest rate charged on money borrowed. Without this type of promotional financing, you would pay this interest rate on any balances held after the due date. Learn more about APR and other credit card terminology
However, with this form of interest-free financing, the APR is 0%.
Key benefits of no interest with equal monthly payments
Equal pay, 0% APR promotional financing makes big purchases easier. The key differentiator between equal pay financing and other types of promotional financing is the ability to calculate the monthly cost of this type of financing.
Whether you’re a stickler for the monthly budget – or just want to simplify your expenses to make your budget easier to manage – equal pay, 0% promotional financing makes monthly payments consistent and predictable. Your monthly bill will be the same throughout the promotional period.
Plus, a 0% interest rate is a great way to reduce financing costs. It’s important to note that missing this payment will result in a late fee, so be sure to make the required monthly payments to take full advantage of this type of offer.
How equal pay, 0% APR financing works
With equal pay 0% APR promotional financing, your monthly payment will be calculated by dividing the purchase amount (and promotional fee, if any) by the number of months of your contract.
If the promotional balance is not paid at the end of the promotional period, payments will continue until the balance is paid in full.
For 0% APR financing, interest does not accrue.. However, if a payment is made late, a late fee will be assessed.
Scenario: A customer makes a $7,200 purchase with a 36-month equal payment, no interest financing option. Every month, for 36 months, the customer makes equal payments of $200. This brings their promotional balance to $0 at the end of 36 months. No interest is accrued.
3. Fixed payment promotional financing (reduced APR)
What is reduced APR promotional financing?
Similar to equal payment financing, fixed payment promotional financing with a reduced APR also offers same-sized monthly payments.
The difference here is with the APR – reduced APR financing comes with a promotional interest rate. Be sure to read the details of a specific financing option to understand it fully.
Key benefits of fixed financing with reduced APR
With fixed payment promotional financing with a reduced APR, the key benefit is getting a reduced interest rate compared to non-promotional rates. In short, this form reduces the interest cost.
How fixed payments work
For reduced APR financing, interest charges will be assessed on the promotional balance during the life of the promotion, at a reduced APR.
Scenario: A customer makes a $10,000 purchase with fixed payment promotional financing. Their promo period is 60 months with a 20.90% APR. The required monthly payment is $270 throughout the promo period, making the total payments with interest equal $16,199. Monthly payments will include principal plus interest, and payments will continue until the promotion is paid in full.
Comparing types of promotional financing
Want to compare promotional financing details side by side? Use the chart below to understand how each of the types of promotional financing offers works.
| Deferred Interest |
Equal Pay - 0% APR |
Fixed Pay - Reduced APR |
|
|---|---|---|---|
| Interest? |
Interest-free if paid in full before promotional period expires |
No interest on the promotional purchase |
Reduced APR until promotional balance is paid in full |
| Interest accrual? |
Interest accrued monthly from purchase date on the unpaid balance, but not charged within promotional period |
No interest accrues during on promotional purchase |
Interest charges assessed on promotional balance during the life of the promotion at a reduced APR |
| Minimum monthly payments? |
Minimum monthly payments required, calculated based on the specific credit card agreement |
Minimum monthly payments required, calculated to pay off the amount financed within the promotional period |
Required minimum monthly payments, include principal, interest, and possible promo fee |
| When promotional period ends? |
When promotional period expires, any remaining promotional balance and all accrued interest are posted to the regular balance, and standard APR terms apply. |
No accrued interest; however, if a payment is not made on time, a late fee may be charged |
Monthly payments will continue until the balance is paid in full |
Which type of promotional financing is right for me?
Promotional financing comes in lots of shapes and sizes, to help people meet a variety of goals. The best way to determine which type of financing option is right for you is to browse available options, run some calculations to determine cost and affordability, and read the terms of the financing option.
How to get started with promotional financing
A great way to get started is to start browsing promotional financing offers available on various Synchrony issued credit cards on our Marketplace or Credit Cards Overview Page. Once you narrow it down to the financing option and credit card that’s right for you and your goals, you can either apply or see if you prequalify.
Prequalification lets you quickly know whether your application is likely to be accepted, and it has no impact on your credit score.
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