Many credit cards offer a grace period, which is the period of time between the end of a billing cycle and when your bill is due. During a grace period, you may not be charged interest on your balance — as long as you pay it off by the due date.
Grace periods vary by card issuer, but must be a minimum of 21 days from the end of a billing cycle. For example, if your billing cycle ends on the first of each month and your bill is due on the 22nd of the month, your grace period is 21 days.
Below, CNBC Select answers some common questions about credit card grace periods.
Do all credit cards have grace periods?
No, card issuers are not required to offer grace periods, though most do.
What transactions qualify for a grace period?
Grace periods typically don't apply to all transactions you make with your credit card. Eligible transactions are often limited to new purchases.
Cash advances and balance transfers typically don't qualify for a grace period. Instead, those transactions are charged interest beginning on the transaction date. However, if you have a balance transfer credit card offering an intro 0% APR, you won't be charged interest during the intro period.
What happens after the grace period?
If you continue to carry a balance after the grace period ends, you will be charged interest at the regular purchase APR (unless your card offers an intro 0% APR period). For example, if you have a credit card with a 16.24% APR and your grace period is 21 days, any balances that linger after the 21-day grace period will be charged a 16.24% APR.
You could be hit with a late fee on top of interest charges if you don't make at least the minimum payments before the grace period ends.
Where can I find my credit card grace period?
You can find your grace period in your cardholder agreement. It will likely appear in the "interest rates and interest charges" table on the first page and in a row stating "how to avoid paying interest on purchases" or "paying interest."
Here's an example of what it may look like in your cardholder agreement:
Interest rates and interest charges
| Annual Percentage Rate (APR) for Purchases | 16.24% to 25.24%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate. |
| APR for Balance Transfers | 16.24% to 25.24%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate. |
| APR for Cash Advances | 26.74%. This APR will vary with the market based on the Prime Rate. |
| How to Avoid Paying Interest on Purchases | Your due date will be a minimum of 21 days after the close of each billing cycle. We will not charge you interest on purchases if you pay your entire balance by the due date each month. We will begin charging interest on balance transfers and cash advances on the transaction date. |
In the last row titled "how to avoid paying interest on purchases," you can see the grace period is a "minimum of 21 days."
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
Quick Answer
How do you explain grace period? ›
A grace period is the period between the end of a billing cycle and the date your payment is due. During this time, you may not be charged interest as long as you pay your balance in full by the due date. Credit card companies are not required to give a grace period.
What is the definition of a grace period? ›
What Is a Grace Period? A grace period is a set length of time after the due date during which payment may be made without penalty. A grace period, typically of 15 days, is commonly included in mortgage loan and insurance contracts.
What is a grace period quizlet? ›
Definition of Grace Period. - a free period that allows you to avoid the interest charge by paying your current balance in full before the due date shown on your billing address.
What is a sample of grace period? ›
For example, if your billing cycle ends on the first of each month and your bill is due on the 22nd of the month, your grace period is 21 days.
What is a grace period and how long is it? ›
A grace period is usually between 21 and 55 days. Keep in mind that a credit card grace period isn't an extension of your due date. If you pay less than the full balance, miss a credit card payment or pay your bill late, your credit card issuer will charge you interest.
How do you use grace period in a sentence? ›
This is what the 14 days' grace period is and remains. We ask that the grace period be extended even further. The loans were usually for 25 years, with a grace period at the start during which no capital repayments are made. In any case, there is a six-month grace period.
How do you get a grace period? ›
The grace period only applies if the consumer paid his or her last credit card bill in full and on time and didn't carry a balance for any portion of the previous billing cycle.
What is 7 days grace period? ›
Example of Grace Period
Let's take a look at this example: Ravi has a mortgage with a due date of the 10th of every month and as per the agreement it has provided 7 day grace period. This means that the customer can pay the amount as late as the 17th of the month without being charged with any penalties.
What is a grace period quizizz? ›
A grace period is the time between making a purchase and when the company begins charging you interest.
The grace period is a set period of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan. To determine the length of your grace period, check your promissory note. Learn more about beginning loan repayment.
How much is a grace period? ›
If you pay your credit card statement balance in full by the due date every month, your grace period continually renews, and you will never pay interest on purchases. A credit card grace period, when you have one, is a minimum of 21 days.
Which best describes a grace period? ›
Final answer: A grace period is the time offered by credit card companies to pay off the balance before interest is charged. It's not the minimum payment requirement or any other credit card fee structure.
What does a 3 day grace period mean? ›
A 3-day grace period is like a financial safety net, granting you three additional days beyond the official due date to pay without facing any penalties or adverse consequences. It's a brief but vital period that can provide much-needed breathing room when life throws financial curveballs your way.
