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What Is a Credit Card Grace Period?

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Brittney Myers
Author: Brittney Myers
Brittney Myers
Brittney Myers
Writer

Brittney started her writing career in the world of science, putting her physics degree to good use. Her journey into finance started with building her personal credit, but soon grew into a borderline obsession with credit cards and travel rewards. For the last 7 years, she has enjoyed the ability to share her expertise with readers, as well as the opportunity to interview companies and individuals making an impact on our financial lives. She wholly believe most problems can be solved with the right research -- and a good spreadsheet -- and she specializes in translating complex financial topics into actionable advice to help educate and empower readers.

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If the idea of paying credit card interest doesn't sound fun, you're in luck. As long as your card has a credit card grace period and you can cover the bill, you'll never have to pay interest fees again. All you need to do is pay your monthly balance in full before the end of your grace period. How does it work? This guide to credit card grace periods lays it all out.

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What is a credit card grace period?

The grace period on a credit card is the period of time you have to pay for purchases before you get charged interest. In other words, if your credit card has a grace period, that's time when you won't accrue interest.

In general, the term "grace period" refers to the period of time between when your credit card statement closes and when the bill for that statement cycle is due. If you pay off your full balance during the grace period -- i.e., before your bill's due date -- you won't have to pay any interest fees on purchases from that billing cycle.

For example, say you spent $500 during your credit card's billing cycle that closed on Oct. 1. The due date on your credit card bill is Oct. 25, making the grace period 25 days. So long as you pay the full $500 balance at some point in those 25 days, you won't pay any interest on those purchases.

One thing to keep in mind is that only balances from new purchases will qualify for the grace period. So balances from a balance transfer or a cash advance have no grace period. These transactions typically start to accrue interest as soon as they hit your account.

It's important not to confuse 0% intro APR credit cards with credit card grace periods. Some cards offer promotional 0% intro APR interest rate deals for a set period of time after you first open your account. These deals let you carry a balance without interest fees for the length of the promo offer, usually a year or so. Your card's grace period is separate from any promotional deals you may receive when you open your account.

How long is a typical credit card grace period?

The average grace period -- the time from statement close to bill due date -- for most credit cards is 25 days. Some issuers shorten the grace period to 23 days for February statements. However, grace periods can vary between issuers or even between cards.

At a minimum, your credit card grace period should last 21 days. That's because credit card companies are legally required to provide your bill at least 21 days before they start charging fees. On the other end, grace periods longer than 25 days are rare. You won't see any grace periods that last more than 30 days.

Do all credit cards offer a grace period?

Not every credit card will come with an interest-free grace period. There's no law that says credit card companies need to offer a grace period. Despite this, nearly every major credit card issuer will offer grace periods, as you'll see when comparing credit card offers.

The issuers most likely to skip the grace period are those that target subprime consumers with bad credit. Without a grace period, every card transaction is subject to interest as soon as it posts. This can get expensive and compound your credit card debt.

If you need a credit card for bad credit, consider a secured credit card. Most secured cards will have a grace period, as well as lower fees than subprime cards.

What happens if you don't pay the full balance after the grace period?

As long as you make at least your minimum payment, the main consequence of carrying a balance is interest fees. You'll also forfeit your grace period until you're back at a $0 balance.

Credit card interest is calculated based on your average daily balance, starting from when a transaction hits your account. If you pay your balance in full during the grace period, that interest goes away. However, if you only make a partial payment, those interest fees will typically show up on your next statement. You'll then need to pay off your remaining balance, plus any interest fees and any new purchases, to be eligible for a grace period again.

Let's go back to the above example of the $500 balance. If you pay the full $500 during the grace period, you won't be charged any interest at all. But what if you only made a $100 payment on that balance? Your next statement will now include the interest from your remaining $400 balance, plus interest charges on any new purchases you've made. Until you pay off the entire balance on your card, interest will continue to accrue.

Of course, this assumes you made at least your minimum required payment, even if you didn't pay your full balance. If you don't make at least the minimum payment you'll also be charged late fees. If you continue to miss payments, you could damage your credit score too.

Avoid carrying a credit card balance

When you carry a balance on your credit cards, you'll be charged interest fees based on your average daily balance. This means your balance will grow every day as new interest fees are added. Instead, try not to carry a balance. That way you can take advantage of your card's grace period and avoid interest fees altogether.

Where can I find my credit card grace period?

You can see if your card has a grace period, and how long it is by checking the Schumer box in credit card's terms and conditions. This is usually found by clicking the link for "Rates and Disclosures" or "Pricing and Terms." Look for the long table that lists your various APRs and other fees.

Most credit card terms won't call it a grace period. Instead, it will likely look something like this:

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 new purchases if you pay your entire balance by the due date each month.

Credit cards without a grace period will usually have a section called "Paying Interest" and state that you will be charged interest on purchases as soon as they post to your account. If you're unsure of your credit card's policy, be sure to double check with the issuer.

FAQs

  • A credit card grace period is the period of time you have to pay off your card balance before you're charged interest fees. If your card has one, you can put interest charges on hold during the grace period. You can avoid interest fees entirely if you pay your balance in full before it ends.

  • On average, a credit card grace period lasts 25 days past the end of your statement cycle, though this can vary between issuers. However, since issuers are required to issue your bill at least 21 days before it's due, the minimum length of a grace period will be 21 days.

  • No, some credit cards don't have a grace period at all. That said, the vast majority of credit cards offer a grace period of at least 21 days. You're unlikely to get a grace period on cash advances and balance transfers. This means these transactions will start accruing interest fees right away, even if your card has a grace period for new purchases.

    Credit card companies have no legal obligation to offer a grace period. Most do, but some issuers choose to forgo it entirely. This is particularly common amongst expensive subprime credit cards marketed towards those with bad credit.