A credit card’s grace period is the length of time between the end of a billing cycle and when your payment is due. During this period, which is usually about three weeks, you can pay off the balance without incurring interest or late fees. If you don’t pay your full statement balance by the due date, however, your grace period expires and you’ll owe interest on your balance, as well any new purchases you make.
Below, we take a look at how grace periods on credit cards work and how you can take full advantage of them.
Table of Contents
- What Is the Grace Period on a Credit Card?
- How Credit Card Billing Cycles and Grace Periods Work
- Limits on Credit Card Grace Periods
- How Long Is the Typical Grace Period for a Credit Card?
- What Types of Transactions Are Eligible for Credit Card Grace Periods?
- Taking Maximum Advantage of Your Credit Card’s Grace Period
- Can You Lose Your Credit Card’s Grace Period?
- FAQ
Key Points
• A credit card grace period is the time between the end of your billing cycle and the payment due date, typically 21 to 25 days.
• During the grace period, interest does not accrue on your purchases, provided you pay your full balance by the due date.
• You can lose your grace period if you fail to pay your statement balance in full by the due date.
• Grace periods generally only apply to new purchases and do not cover cash advances or balance transfers (unless a 0% introductory APR is offered).
• To maximize the interest-free time, make large purchases just after your statement closing date.
What Is the Grace Period on a Credit Card?
Credit cards allow you to borrow money over the course of a one-month billing cycle, during which you may not need to pay interest. The end of your credit card billing cycle is also called your statement date. That’s when your monthly credit card statement (aka your bill) is generated and available online. Unless you’ve signed up for paperless billing, it will also be mailed to you. Credit card payments are due on the payment due date, about three weeks later. The time in between these dates is what’s known as the grace period.
During this time, you won’t be charged any interest on the purchases that you made during the billing cycle. However, because of how credit card payments work, you must pay off your credit card’s statement balance in full by your payment due date in order to avoid interest payments. At the very least, you must make your minimum payment, and you’ll then owe interest on whatever balance you carry into the next month.
How Credit Card Billing Cycles and Grace Periods Work
Credit card issuers are not legally required to offer a grace period. However, many of them do. If an issuer does choose to offer a grace period, it must be at least 21 days.
If your card offers a grace period and you pay your full statement balance by the due date, you can avoid paying interest on your purchases. In addition, the grace period renews for the next billing cycle. If you pay the next cycle’s bill in full by the due date, it renews again. If you continue this pattern, you can avoid paying interest on your credit card.
Limits on Credit Card Grace Periods
Credit card grace periods typically only apply to purchases. That means if you’ve used your credit card to get a cash advance at an ATM, for example, you’ll have to start paying interest on the date of the cash advance transaction.
It’s also important to note that grace periods aren’t guaranteed. If you don’t pay your full statement balance by the due date, you lose your grace period and will be charged interest on the unpaid portion of the balance. You will also be charged interest on any purchases you make in the new billing cycle starting on the date each purchase is made.
Recommended: Tips for Using a Credit Card Responsibly
How Long Is the Typical Grace Period for a Credit Card?
Grace periods generally last at least 21 days and up to 25 days. Some card issuers may offer a promotional grace period when you first get your card, which can be as long as 55 days.
You can find out how long your grace period is by reviewing your monthly billing statement. The statement will list the “closing date” (when the billing cycle ends) and the “payment due date”. The time between these dates is your grace period. You can also find out how long your grace period is by checking your original cardholder agreement. The length of your grace period should be listed alongside fees and your annual percentage rate (APR). You can also call your credit card company and ask them directly.
What Types of Transactions Are Eligible for Credit Card Grace Periods?
Generally only purchase transactions are eligible for the credit card grace period. Cash advances — which allow you to borrow a certain amount of money against your line of credit — typically are not eligible. They will start accruing interest the day you make the transaction.
Similarly, if you transfer a balance from one credit card to another, you’ll start to accrue interest on that balance immediately. The only exception is if you have a balance transfer credit card with a 0% introductory rate for a period of time. If you pay off the balance during that period, you won’t owe interest. However, interest will accrue on whatever remains of your balance at the end of that period.
Taking Maximum Advantage of Your Credit Card’s Grace Period
To take full advantage of your credit card’s grace period, you might time any large purchases you need to make for just after your statement closing date, which is right at the beginning of the new billing cycle.
For example, if your statement closes on the 15th and you buy a large item on the 16th, that purchase won’t appear on a bill until the next closing date (roughly 30 days later). You then have the standard 21 to 25 day grace period to pay that bill, effectively giving you nearly two months of interest-free borrowing.
If you always pay your statement balance by the due date, you can extend your grace period indefinitely.
Can You Lose Your Credit Card’s Grace Period?
Yes, you can lose your credit card grace period if you don’t make on-time payments in full each month by the payment due date. If you lose your grace period, you’ll be charged interest on the remaining portion of your balance. In the new billing cycle, you’ll also owe interest on any new purchases on the day the transaction takes place. This can trap you in an expensive cycle of debt that can be hard to get out of.
Fortunately, card issuers will typically restore your grace period once you’ve paid your full statement balance for one or two billing cycles.
The Takeaway
Your credit card grace period is an important tool that can save you money on interest if you pay off your statement balance in full each month. If you don’t pay your balance in full each month, you could lose this privilege temporarily. This means you’d end up owing interest on your remaining balance and any new purchases.
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FAQ
What is the grace period for credit card payments after the due date?
Credit card grace periods occur before the payment due date. Payments made after that date are considered late. After the due date, cardholders will owe interest on their balance. Further, they may lose their grace period until they can pay their balance off in full for one or two months.
What happens if you are one day late on a credit card payment?
Being one day late on a credit card payment typically triggers a late fee and the potential the loss of your grace period, meaning you’ll owe interest on your balance. However, it shouldn’t negatively impact your credit. Credit card issuers typically only report late payments to credit bureaus once they are at least 30 days past due.
What is the typical grace period for a credit card?
A credit card grace period is the interest-free window between the statement closing date and the payment due date, which is typically 21 to 25 days. Some issuers may offer a longer promotional grace period, sometimes up to 55 days, when you first open the account. You can confirm the exact length of your card’s grace period by checking your monthly billing statement and looking at the time frame between the statement closing date and the payment due date. You can also find this information in your original cardholder agreement or by contacting your credit card company directly.
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