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What Is a Credit Card Grace Period?

What Is a Credit Card Grace Period?

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This article was last updated Sep 24, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

If you want to avoid paying interest on the purchases you make with your credit card, it pays to take advantage of your card’s grace period, which allows you to pay off your balance within a certain time frame — usually 21 to 25 days after the billing cycle ends — without incurring interest charges.

However, you must pay your balance in full from month to month to qualify for the grace period, and if you pay late or carry a balance from time to time, your card’s grace period clock will have to be restarted.

Here’s what you need to know about grace periods, including what they are, which transactions qualify for them and how to maximize the amount of time you have to pay your balance interest-free.

What is a credit card grace period?

A credit card grace period is the amount of time between the end of a billing cycle and when your bill is due. During this period, you will not be charged interest on your balance.

Issuers are not required to offer grace periods, but most do. While the length of the grace period varies by issuer, the Credit CARD Act of 2009 requires that they last at least 21 days from the end of a billing cycle — although some may last as long as 25 days. This means, if your billing cycle ends on the 3rd of each month and your bill is due on the 26th, your grace period is 23 days.

Whether or not a grace period is offered can also depend on the type of card you have. For example, traditional credit cards usually offer grace periods, while charge cards do not (since balances are due in full each statement due date).

What transactions qualify for a grace period?

Transactions that are eligible for grace periods are typically limited to new purchases. Other transactions, like balance transfers and cash advances, do not qualify for a grace period and are instead charged interest starting on the transaction date.

Keep in mind, though, it is possible to receive an interest-free period on purchases, as well as balance transfers, by using a card offering a 0% intro APR promotion — but once that promotion ends, the standard rules apply.

What happens if I don’t pay my balance in full?

If you don’t pay off your entire credit card balance before the grace period ends, you will begin to be charged interest on the unpaid amount at the card’s regular purchase APR (unless, of course, you’re within a card’s 0% intro APR promotion period).

For example, let’s say you have a credit card with a 23.99% variable APR and a 23-day grace period. Carrying a balance beyond the 23 days following the close of your billing cycle means you will be subject to interest charges at a rate of 23.99% variable on that unpaid amount, broken down into a daily charge.

If you only pay a portion of your balance or just the minimum payment due in your current statement, you will have forfeited your card’s grace period and any new purchases added to your balance going forward will begin to immediately accrue interest, as will your existing balance that was unpaid. It isn’t until your balance is cleared for a couple statement cycles before your grace period will kick in again.

How Does Credit Card Interest Work?

What happens to my grace period if I miss a payment?

If you miss a payment, you may temporarily lose out on your grace period for a certain amount of time. You typically forgo your grace period for two months, but some issuers may end your grace period indefinitely or require you to make several consecutive payments on time and in full before your grace period is reinstated.

For example, if you have a Capital One credit card and pay late or don’t pay your balance in full every month, you may lose your grace period — but you can get it back by paying your balance in full for two consecutive billing cycles.

You should also know that if you’re late paying the minimum amount due, you may be subject to late payment fees.

How Does a Late Payment Affect Your Credit Score?

Where do I find my credit card grace period?

You can locate your credit card’s grace period in the rates and fees information in your card’s terms and conditions, next to listings like “How to Avoid Paying Interest on Purchases” or “Paying Interest.” See what grace periods are offered by the following issuers:

Credit card grace period by issuer

IssuerMinimum length of grace period (days)
American Express25
Bank of America25
Capital One25
Discover25 (23 days for billing periods that begin in February)
Wells Fargo25

If you can’t locate the grace period in the card’s terms and conditions, it may be an indicator that your card doesn’t offer one. If that’s the case, your purchases will begin accumulating interest on the day of each transaction — even if you pay off your balance in full by the card’s due date. If you’re unsure of what your card’s grace period policy is, you can always call the telephone number listed on your card and ask a representative for help.

Can I extend my credit card’s grace period?

While you most likely won’t be able to receive an extension on your grace period by simply requesting one from the issuer, you may be able to push the date back slightly by asking to change your billing due date.

Or, if you want to maximize the amount of time you have to pay off a large purchase without incurring interest charges, you can do so by purchasing the items right after your statement period closes.

For example, let’s say you need to purchase kitchen appliances for your home. If your billing cycle closes on Nov. 26 and you’ve been paying your balances off in full, you can use your card to purchase the items on Nov. 27. The purchases will appear on the next billing statement, and you’ll have 21 additional days (or more, depending on your card’s grace period), to pay for the charges in full without incurring interest charges — so if your statement ends on Dec. 26, this will give you at least until Jan. 16.

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