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
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 the point of a grace period? ›
A credit card grace period occurs when you completely pay off your previous statement balance by the due date. When you do this, you can carry a balance for any purchases during the next billing cycle and you won't be charged any interest. You prove to the bank that you're good for the money you borrow from them.
What is a grace period example? ›
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.
How long does a grace period last? ›
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.
What is the grace period rule? ›
In other words, it is a length of time during which rules or penalties are waived or deferred. Grace periods can range from a number of minutes to a number of days or longer, and can apply in situations including arrival at a job, paying a bill, or meeting a government or legal requirement.
Which best describes a grace period? ›
The grace period is a window of time during which a consumer owes money to a credit card company for new purchases made during the last billing cycle but isn't being charged interest.
How important is grace period? ›
Grace periods are important because they give people an opportunity to pay their bills without being charged additional fees or interest.
What are the benefits of a grace period? ›
Continuity of Coverage: The primary benefit of a grace period is that it allows policyholders to maintain their insurance coverage temporarily, even if they miss a premium payment. This ensures that they remain protected against unforeseen risks and liabilities during this period.
What happens if you miss grace period? ›
If you ignore your premium payment during the grace period, your policy will lapse, and your coverage will end. You may be able to have it reinstated, but chances are you'll have to go through medical exam underwriting and have to pay higher premiums.
How can you lose your grace period? ›
If you do not pay off your statement balance in full before your grace period ends, you lose the grace period on your credit card. This means that both your current balance and any new purchases will begin accruing interest immediately.
After your nine-month grace period expires, the billing cycle starts and interest begins accruing. You will not be expected to make that first payment until the end of the first quarter of the billing cycle. For example, if your grace period ends in December, your first payment will be due in March.
What is the grace period clause? ›
An insurance grace period is a defined amount of time after the premium is due in which a policyholder can make a premium payment without coverage lapsing. The insurance grace period can vary depending on the insurer and policy type.
What is considered a 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.
How much will it cost in fees to transfer a $1000 balance to this card? ›
It costs $30 to $50 in fees to transfer a $1,000 balance to a credit card, in most cases, as balance transfer fees on credit cards usually equal 3% to 5% of the amount transferred.
Am I still covered during grace period? ›
If you're in your grace period
Pay all your owed premiums to avoid losing your coverage before your grace period ends. If you don't pay all owed premiums, you may lose your coverage dating back to the first month you missed the premium payment.
What is the meaning of total grace period? ›
extra time you are given to pay money you owe without losing something or paying an additional amount: You have a ten-day grace period in which to pay your insurance premium.
Is it bad to pay a mortgage during the grace period? ›
It's certainly acceptable to pay your mortgage during your grace period. After all, that's what the grace period is for—to make your payment without penalty in case the due date slips your mind or an unexpected circ*mstance keeps you from paying on time.
