Grace Period

On many credit cards, the grace period is the time between the end of a billing cycle and the payment due date. If you pay the full statement balance by the due date, you are not charged interest on purchases made during that cycle. This can give you several weeks of interest-free borrowing on everyday purchases.

The grace period usually applies only if the full balance is paid. If you carry part of the balance into the next month, interest is often charged and the grace period may be lost on new purchases until the balance is cleared. Cash withdrawals on credit cards usually have no grace period at all.

Loans and bills can also have grace periods. A loan agreement might allow payment up to ten days after the due date before a late fee is added. Student loans in some countries have a grace period after graduation before repayments begin.

Grace periods are helpful, but they are not extensions without consequences in every case. It is always worth checking exactly how long the period lasts and what conditions apply.