Credit Card Grace Periods – How Do They Work?

Tired of paying interest on your credit card purchases? Understanding your credit card grace period can make a difference.
Perhaps you’ve heard of a credit card grace period before. But if you’re still confused about what it is and how it works, read on for answers. In short, it can help you save money and pay off your debt faster.

What Is a Credit Card Grace Period?

Though it’s not required, most credit card issuers still offer a grace period. Put simply, this grace period is the amount of time you’re given to pay your balance in full – without paying an interest fee.

Where Can I Find My Grace Period Details?

Locate your credit card grace period details in your credit card agreement. If you don’t have this, check the credit card issuer’s website. You can also reach out to the credit card issuer and have the agreement mailed to you.
Further, you may find the agreement on your card statement. Search the back of the document for exactly how your “finance charges” are calculated.

How Does a Grace Period Work?

The grace period typically begins on the first day of your billing cycle. Depending on the card issuer, it ends a particular number of days after. Usually, grace periods extend anywhere from 21-25 days.
The longer your grace period, the longer you have to pay off your balance in full and avoid interest charges.

The Truth About Grace Periods

Let’s have a look at some examples. If you pay your credit card balance by the due date, you’re rewarded with a grace period. You have no balance carried forward. So, you enter an interest-free grace period. And this applies to new purchases in your current billing cycle.
But say you purchase a new mattress for $3,000. You pay off most of that balance, leaving $250 unpaid. That balance then carries over and will be assessed interest. That interest is also now a factor in every new purchase you make during the billing cycle. It’s important to pay off your balance in full when you can so that you avoid these harsh terms.
Remember: If you pay your credit card balance in full each cycle, your grace period remains intact.

How Do Credit Card Grace Periods Help Me?

Grace periods allow you time. If you have a zero balance and make a purchase at the beginning of your current billing cycle, you’ll have a few weeks to pay the balance in full. Interest won’t be a factor unless you fail to pay your balance by the end of the grace period.
The grace period comes in handy if you’re making an expensive purchase. You don’t want to pay interest if possible, right? But you need a couple of weeks to pay in full. You’ll have those typical 21-25 days of “grace” to make payments on the big-ticket item without worrying about interest fees.

A Final Word

Communicate with your credit card issuer if you have questions. They will work with you to understand the grace period and to time your purchases accordingly.
Remember that missing a credit card payment is never a good idea. You’ll see late fees, and that’ll increase the interest on your balance. It can lower your credit score, too. At the very least, make your minimum payment by the due date.
And if you can pay your balance in full, look forward to the convenience of your credit card grace period.