What Is a Promotional Balance on a Credit Card?

Credit card promotional financing offers can make paying for certain purchases over time easier and potentially less expensive. Instead of your purchase being charged interest at the card's annual percentage rate (APR), the promotional offer may defer or temporarily reduce interest charges. When you use one of these offers, your card could have separate promotional and regular balances.

What Is a Promotional Balance?

A promotional balance refers to a credit card balance that’s currently subject to a promotional offer.

Although you might receive one credit card bill each month, it can be common for credit cards to have several types of balances at the same time.¹ For example, your card could have three separate balances for your purchases, balance transfers and cash advances.¹ Your credit card statement may separate the balances, list each one's APR and tell you how much of the balance is subject to the APR.²

If the card issuer offers you a promotional APR on your purchases, your new purchases could become part of a promotional purchase balance. Your statement may list the promotional balance alongside its APR. Balances from previous purchases could still be part of the regular purchase balance, unless the offer applies to them as well.

Some credit cards might have different promotional offers for purchases and balance transfers. In that case, you could have a promotional purchase balance and a promotional balance transfer balance on your card. Promotional offers are less common for cash advances.

Promotional Balance vs. Regular Credit Balance

Your credit card's regular balances are any of the balances that don't currently have a promotional rate. You could have regular purchase, balance transfer and cash advance balances, and your card's terms will dictate each balance's APR.

Promotional balances are part of a promotional financing offer, and they can work differently depending on the offer's terms. Your promotional balances may have deferred interest, a temporarily lower APR or a special payment plan. These types of offers can make it easier to minimize interest after making large purchases that you want to pay off over time.

For instance, you might want to finance the cost of a cosmetic procedure that your health insurance doesn’t cover. Or, you unexpectedly find yourself at the emergency vet after your dog breaks into your chocolate stash.

Some payment solutions offer promotional financing options that allow you to pay for these types of out-of-pocket expenses over time. With a deferred interest offer, you won’t pay interest on the promotional balance if you pay off that balance within a promotional period. However, if you don’t pay off that balance within the promotional period, interest that has been accruing since the purchase date will be charged to your account and you will be responsible for paying that interest. Alternatively, you might receive a reduced APR if you agree to make fixed monthly payments during a promotional period.

Eligibility, qualifying purchases and the specifics of the offers could vary, so be sure to read the terms closely.

The Importance of Conditions and Terms

Reviewing the terms and conditions of the financing agreement is important for understanding when and how much you’ll have to pay. With credit cards offering promotional financing, some of the important terms you’ll want to look for include:

• Eligible purchases. Review the terms to see which purchases qualify for the promotional financing. For example, with the CareCredit credit card, the promotional financing options available can vary depending on what the healthcare practice offers. There is a minimum purchase amount for promotional financing offers.

• Promotional period. Each promotional financing offer can have a limited promotional period. Find out how long the period lasts and what happens once it ends.

• Promotional APR. If your promotional balance has a promotional APR, learn what the APR will be, when it’s applied to your balance and when it could end.

• Minimum payments. You will have to make minimum monthly payments to keep your account in good standing and avoid late payment fees.

• How your payments get applied. Card issuers may split your payments and apply different amounts to your various balances. Generally, they can choose how they want to apply the minimum monthly payment and then must apply additional amounts to the balance with the highest APR. However, this may change during the last two billing cycles before a promotional period ends.³

Tips to Manage Your Promotional Balance

It can be easier to budget for large expenses when you pay off a bill over time. However, don't assume your credit card's minimum monthly payments will repay the entire promotional balance before the promotional period ends.

Here are two approaches worth considering:

• Even automatic payments over the promotional period. Figure out the monthly payment that will pay off the promotional balance before the promotional period ends. Set up automatic payments for that amount.

• Automatic payments with something extra. A more cautious approach is to set up automatic payments that will pay off the promotional balance a month or two early. The larger payments might be more difficult to manage right now, but you’ll have a little wiggle room in case unexpected expenses pop up.

In either case, if you use the card for additional purchases, you'll want to make larger payments to cover those transactions and stay on track.

Once the promotional period ends, your promotional balance may become a regular balance. If you had an offer with deferred interest, all the interest that was accruing on your promotional balance since the purchase date will be added to your regular balance if you have not paid the promotional balance in full by the end of the promotional period. To avoid the interest charges, you need to pay off the promotional balance during the promotional period.

Look for Promotional Offers When Financing Large Purchases

Promotional financing can be helpful when you're paying off balances over time. When you use one of these offers, the qualifying transactions become part of a promotional balance. Before accepting an offer, review the credit card’s terms to learn how the offer works and make a plan for paying off the promotional balance. Keep in mind that promotional financing cannot be applied to an existing balance.

Managing Health and Wellness Costs With the CareCredit Credit Card

If you are looking for an option to help manage your health and wellness costs, consider financing with the CareCredit credit card. Get the care you want or need with easy, flexible financing options that allow you to pay for out-of-pocket expenses over time.* Use our Acceptance Locator to find a provider near you that accepts CareCredit. Continue your wellness journey by downloading the CareCredit Mobile App to manage your account, find a provider on the go and easily access the Well U blog for more great articles, podcasts and videos.

Your CareCredit credit card can be used in so many ways within the CareCredit network including vision, dentistry, cosmetic, pet care, hearing, health systems, dermatology, pharmacy purchases and spa treatments. How will you invest in your health and wellness next?

Author Bio

Louis DeNicola is a freelance writer who specializes in consumer credit, finances and fraud. He has several credit-related certifications and works with many lenders, publishers, credit bureaus, Fortune 500s and fintech startups.