How credit card grace periods work

Credit card grace periods are worth exploring if you’re looking for a little wiggle room as well as ways to avoid fees and charges.

What is a grace period?

A credit card grace period provides breathing space between your purchases and card payments. A grace period gives you time to review your statement, check your purchases and charges, and then make a payment by the due date, without paying interest.

How long are credit card grace periods?

Credit card issuers are required by law to provide a grace period of at least 21 days, and many stick close to that mandate.

But grace period policies can vary widely, even between the cards in your own wallet. Some can be as long as 55 days, providing more time to make a payment before fees and interest charges.

How to find your card’s grace period

To find your card's grace period, check your statement. You’ll find a “statement date,” which marks the close of your current billing cycle and the charges included in it, and you’ll find a “due date,” which is the date when at least a minimum due payment is required to avoid incurring late fees or interest charges. The period between the statement date and the due is your grace period. 

Or just call your credit card issuer. Ask them to spell it out for you.

Charges not included in a grace period

A grace period often doesn’t apply to every charge on your card. Even during a grace period, you’ll continue to be charged interest on the balance you’re carrying from the previous billing cycle. 

Current balance transfers and cash advances will also accrue interest during your grace period – often starting from their transaction date.

How to make the most of your grace period

A grace period can also buy you a few interest-free weeks. It’s a smart way to leverage your grace period, no matter how long or short.

Just note your statement date, then make your purchase the day after, so it shows up on your next statement. With this method, you won’t owe a payment – and won’t incur interest charges – during the rest of the billing cycle as well as the grace period that follow.

If your billing cycle is 28 days and your grace period is 30 days, you’ve got 58 days to pay off your purchase. If you made the purchase later in the billing cycle, you’d have less time to pay it off before interest charges start.

How to lose your grace period

While grace periods are mandated by federal law, you can also lose the privilege if you don’t pay your full balance on time. 

When you carry a balance from one billing cycle to the next, you might see your grace period suspended during the next billing cycle – with interest charged beginning the same date as your next purchases.

Most card issuers will restore your grace period after you’ve paid your outstanding balance in full for one or two consecutive months.

Conclusion

Take advantage of your credit card’s grace period. It’s designed to allow time between reviewing the purchases on your monthly statement and making the required payment. Grace periods can vary between cards, and if you keep on top of them, you can avoid paying late fees and interest charges. 

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