What’s a Grace Period for a Credit Card? The Secret to Never Paying Interest
Credit Card Insider is an independent, advertising supported website. Credit Card Insider receives compensation from some credit card issuers as advertisers. Advertiser relationships do not affect card ratings or our Editor’s Best Card Picks. Credit Card Insider has not reviewed all available credit card offers in the marketplace. Content is not provided or commissioned by any credit card issuers. Reasonable efforts are made to maintain accurate information, though all credit card information is presented without warranty. When you click on any ‘Apply Now’ button, the most up-to-date terms and conditions, rates, and fee information will be presented by the issuer. Credit Card Insider has partnered with CardRatings for our coverage of credit card products. Credit Card Insider and CardRatings may receive a commission from card issuers. A list of these issuers can be found on our Editorial Guidelines.
A credit card grace period is the time between when your statement period ends and your bill is due. A grace period allows you to make purchases and pay them off while accruing no interest, but only when you pay your statement balance in full each month. If you don’t, you’ll lose your grace period.
Credit Card Insider receives compensation from advertisers whose products may be mentioned on this page. Advertiser relationships do not affect card evaluations. Advertising partners do not edit or endorse our editorial content. Content is accurate to the best of our knowledge when it's published. Learn more in our Editorial Guidelines.
We’ve got a secret — a secret credit card issuers don’t want you to know about…
If you pay your bill in full each month, you won’t ever have to pay interest on purchases with most credit cards. That means you can get the perks and convenience of using a credit card at no additional cost to you.
It’s all thanks to a little something called your credit card’s “grace period.”
How Does a Credit Card Grace Period Work?
A credit card grace period falls between your billing cycle’s completion and your statement’s due date.
During this time, you won’t accrue interest on new purchases made during the previous billing cycle (as long as you’re not revolving a balance on your account from your last statement).
Here’s a simple example of how a credit card grace period may work:
- Your account starts with a $0 balance.
- You purchase a $500 plane ticket on July 1.
- Your billing cycle closes on July 15.
- Your payment is due on August 5.
If you pay off your whole bill by August 5, you won’t owe any interest on your $500 purchase. That’s due to your credit card’s interest-free grace period, which started on July 15. You must pay the full statement balance each month to keep your grace period active for future transactions.
For a more detailed breakdown, read our guide on how paying a credit card works.
Do All Credit Cards Have Grace Periods?
No. Although the majority of credit cards offer grace periods, you should read the fine print in your credit card agreement before making any assumptions.
Take note that even if your card does have a grace period, your credit card issuer will likely take it away if you start carrying a balance from month to month. It doesn’t matter if that outstanding balance came from purchases, balance transfers, or cash advances — you’ll lose the grace period regardless.
Remember that $500 plane ticket from earlier? Say you paid all but $20 of your bill. While you won’t incur late fees, you will prompt the issuer to eliminate your grace period.
That means you’ll owe interest on the remaining $20 — and will also start immediately accruing interest on any new purchases. (Now do you see why we’re always telling you to pay your credit card statement in full?)
Luckily, the penalty won’t last forever: You can usually regain your grace period by paying your credit card statement balance in full for two consecutive billing periods.
What Is a Typical Grace Period for a Credit Card?
Starting in 2010 with the CARD Act, federal regulations state that there must be at least 21 days between the day your credit card company delivers your bill and your due date. If your credit card company offers a grace period, it must give you at least 21 days to pay off your new balance before charging you interest. The exception, as mentioned, is if you’re already carrying an outstanding balance on the account.
In other words, the majority of credit cards give you at least 21 days before you start incurring finance charges.
Check your credit card’s terms and conditions for the specifics; you might have longer than you think. The Capital One grace period is 25–55 days, for example, and the grace period for Discover cards is at least 23–25 days.
Unfortunately, there’s no “late credit card payment grace period.” To avoid late payment penalties, you need to pay at least your bill’s minimum payment by the due date. But remember: If you make just the minimum, and don’t pay the statement balance in full, your issuer will eliminate your grace period. Which means you’ll start racking up interest on any new charges right away.
Does Changing a Due Date Extend the Grace Period?
Not really. While you’re welcome to change your bill’s due date with most issuers to make it more convenient, it won’t affect the current cycle’s grace period.
Translation? Changing your due date won’t grant you any extra breathing room right now.
If you have specific questions about your situation and due dates, we recommend checking with your card issuer directly.
How to Get an Extra Long Grace Period
If you’re making a big purchase, one smart strategy is to do so right after your statement’s closing date.
That way, your bill won’t be due for about two months, giving you the maximum grace period to “float” your purchase without collecting interest.
Here are some sample billing cycles to illustrate this point:
|Cycle Start||Cycle End||Due Date|
As you can see, if you made a purchase on October 28, your bill wouldn’t be due until December 23. That’s nearly two months of an interest-free loan.
Credit Cards Don’t Have to Be Expensive
So now you know the secret: Credit cards don’t have to cost a darn thing.
As long as you always pay your bill on time and in full — and as long as your card has a grace period — you’ll never owe a dime in interest on purchases. You might earn some valuable rewards along the way as an added bonus. But remember that grace periods usually don’t apply to balance transfers and cash advances.
Susan is a freelance writer who specializes in turning complex financial topics into engaging and accessible articles. She's been writing about personal finance for six years, and was previously the senior writer at The Penny Hoarder and a staff writer at Student Loan Hero. Her personal finance writing has also appeared in publications like MarketWatch and Lifehacker.
Michelle Lambright Black is a leading credit expert, author, writer, and speaker with over a decade and a half of experience in the credit industry. She is an expert in credit reporting, credit scoring, financing (mortgages, credit cards, loans), debt eradication, budgeting, saving, and identity theft. She is featured monthly at credit seminars, podcasts, and in print. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).
Do you have a correction, tip, or suggestion for a new post? Contact us here.
The responses below are not provided or commissioned by bank advertisers. Responses have not been reviewed, approved or otherwise endorsed by bank advertisers. It is not the bank advertisers' responsibility to ensure all posts are accurate and/or questions are answered.