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What Is the Grace Period on a Credit Card? | Credit Cards

The best way to maximize your credit card usage is to take advantage of the convenience, but avoid paying interest on your purchases. To do this, you must understand how the credit card grace period works.

What is the grace period on a credit card?

The grace period on a credit card is the period between the end of the billing cycle and the payment due. The end of the billing cycle is also called the statement date, or when the monthly statement is physically sent or made available online to the cardholder. Payment is due in about three weeks.

No interest will be charged to you on purchases made during the billing cycle as long as you pay your bill in full before the due date. says Bruce McClary, vice president of communications at the National Credit Counseling, a nonprofit financial advisory organization.

Grace periods for revolving credit accounts such as a credit card should not be confused with grace periods on other financial products such as loans, says Leslie H. Tyne, founder and chief attorney at Tayne Law Group, a New York firm that specializes in debt solutions. “It’s different from a mortgage statement where the payment is due on the first day and you have until the 15th to pay,” she says. The due date listed on your card statement is the deadline by which you must pay your bill.

What is a typical grace period for a credit card?

Although credit card issuers are not required to provide a grace period, those that do must provide at least 21 days under federal law. This means that cardholders will have at least three weeks to pay off any purchases they made during the billing cycle, and if they do, they can avoid interest.

Typical grace periods for credit cards are between 21 and 25 days. Capital One CardsFor example, advance at least 25 days from the end of the billing period, while Chasing unlimited freedom Card offers 21 days.

To find your card’s grace period, check the box at the top of the cardholder agreement where the fee and annual percentage rate are listed. In the Paying Interest section, something like: “Your due date will be at least 21 days after the close of each billing cycle. We will not charge you interest on purchases if you pay your balance in full by a due date each month. We will start charging interest on balance transfers and cash advances on the date of the transaction.”

If reading the exact characters isn’t something you want to do, just call your credit card issuer and ask, says Tyne. Since policies often vary by bank and issuer, it is always wise to reach out to customer service when you need clarification.

The good news is that the vast majority of credit card users can avoid paying interest if they take advantage of the grace period policy. “I haven’t personally tried a card for people with fair or good credit who don’t have a grace period,” McClary says. But, he says, it’s not a given in the mortgage market, so be sure to inquire if you’re applying for a card designed for people with poor credit.

In this case, in the credit card agreement under “Paying Interest,” you’ll say something like: “There is no grace period on this account. We will start charging interest on purchases and cash advances on the date of the transaction.”

Can you lose your credit card grace period?

The basic rule to understand with grace periods is that they only stay in play if you make full payments on time each month. “If you carry a balance from one billing cycle to the next, that balance will not benefit from the grace period,” McClarry says. Furthermore, any spending you make during the next billing cycle will start to earn interest from the date of purchase.

So, if you don’t pay your full balance consistently, you can expect that you won’t pay any interest in some months, while in others, you’ll be charged extra. “It might just be a temporary outage if you are able to update the account,” McClary says.

Most issuers restore grace periods after cardholders have paid their outstanding balance in full for one or two consecutive months.

The other thing to keep in mind is that the grace period does not apply to cash advances or balance transfers, only purchases. These types of transactions will start charging interest from the date you make them (except for 0% balance transfer offers).

How can you maximize your credit card grace period?

If you’re on time, you can actually buy a few extra weeks to pay off your interest-free purchases, says Tayne.

The way to do this is to make sure you know your statement history. Next, plan to make the purchase at the beginning of the next statement window. Let’s say, for example, that your card has a grace period of 25 days. Here’s how this scenario could happen:

  • The billing cycle ends on June 5, and the payment due date is June 30.
  • If you buy something on June 6, this transaction will be part of the next billing cycle (which ends July 5).
  • You will have until July 30 to pay your purchases in full without charging interest.

Note that in order to maximize this feature, you cannot carry over any balance from the previous month.
While this method can be helpful, McClary says the best practice when it comes to credit card spending is to try to make sure you have room in your budget to pay in full, regardless of when the bill is due.

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