What’s a Grace Period for a Credit Card? The Secret to Never Paying Interest

Susan Shain

Susan Shain | Blog

Nov 23, 2018 | Updated Dec 03, 2018

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 comes between your billing cycle’s completion and your statement’s due date.

During this time, you won’t accrue interest on purchases made during the previous billing cycle. 

Here’s how it works:

  • 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 because of 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.

For most cards, grace periods don’t apply to cash advances or balance transfers. Because of this, and their other fees, we strongly advise against cash advances. For balance transfers, we suggest finding a card with a lengthy 0% intro APR.

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.

Usually you’ll see a statement declaring the grace period in your card’s terms and conditions. Here’s what you’ll see in the terms for the Chase Sapphire Preferred Card (Review) (as of 11/23/18):

Grace period for the Chase Sapphire Preferred Card. Image credit: Chase

Grace period for the Chase Sapphire Preferred Card (as of 11/23/18). Image credit: Chase.

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 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?

Federal regulations state that, if your credit card company offers a grace period, it must be at least 21 days between the time you receive your statement and the time your bill is due.

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.

For most cards, due date changes usually take at least one billing cycle to go into effect — and for some issuers, like Amex and Citi, it could take as many as three billing cycles.

Translation? It 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
9/27 10/26 11/23
10/27 11/26 12/23
11/27 12/26 1/23

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. But remember that grace periods don’t apply to balance transfers and cash advances.

If you choose a card without an annual fee, you’ll get the convenient, credit-building, and interest-free mini loans of a credit card, without feeling the burden of high interest rates.

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