Credit Card Q&A: What does a credit card “grace period” mean?

Published

March 11, 2015

A consumer advocate, Beverly Blair Harzog focuses on credit card issues and provides insight about current news that affects the credit card industry and consumers. She's a nationally recognized expert on credit card issues and is also the co-author of Confessions of a Credit Junkie. Visit Beverly at BeverlyHarzog.com.

Credit Question: What does a credit card “grace period” mean?

Answer: This is one of those terms that gets tossed about a lot by the media, but rarely gets clearly explained. The grace period is the amount of time you have to pay your entire balance without being charged any interest. If you aren’t already carrying a balance, it’s kind of like a free loan during this time. Generally, it’s the time between the statement date and the date the payment is due.

Grace periods usually last around 21 days, but you have to read the terms and conditions of your credit card agreement for the details. The Credit CARD Act of 2009 requires issuers who offer grace periods to mail your billing statement at least 21 days before the due date. Pay your balance off within the grace period and you’ll save a lot in interest expense.

Note, though, that some transactions aren’t covered by the grace period. Typically, balance transfers and cash advances aren’t covered. So as soon as you swipe your card for that cash advance at the ATM, interest starts accruing. The rates can be high, so read the terms of your credit card agreement carefully so you know what’s covered by the grace period.