Credit Card Grace Period

Credit card grace period refers to the number of days a credit card company gives before charging interest on your new purchases.
In the US, a grace period can range from 20 to 30 days, depending on the credit card company. Let’s say you used your card for gas on January 11th, this purchase is most likely to appear on your next bill, dated February 5th. Starting from this billing date, the credit card company may allow you a grace period before they start charging interest or a finance charge on your new purchases. Ideally, a credit card grace period will allow you to settle your bill on time without having to pay for the interest. Unfortunately, in most cases, it comes with a snag.

Credit card companies actually have different versions of a credit card grace period and they can make changes about it without your consent. The typical or standard grace period is one that requires a cardholder to pay interest on all new purchases immediately, unless s/he has paid the previous month's bill in full. How do you know if your card carries a typical credit card grace period? This can actually be read at the back of your card statement as a method that computes “average daily balance including new purchases”. If you’re the type of person who pays the bill fully and on time each month, you can benefit from a typical credit card grace period. It can also be beneficial to people who only pay their bill in full sometimes.

The other grace period is the full credit card grace period. Written in your billing statement as a method that computes “average daily balance excluding new purchases”, this type is beneficial to people who either pay their bill fully every month or those who fail to do so from time to time. This is because a full credit card grace period excludes new purchases when computing for the amount of interest you need to pay for the current cycle. Hence, whether you scraped off your balance for the previous month or not, you still get the grace period.

Unfortunately, there are also companies who do not offer any credit card grace period for their cards. So, check your billing statement to see if a grace period is given. If you’re not sure which type of credit card grace period you have on all your cards, you can call the bank’s customer service and ask for an explanation. If you’re still weighing credit cards, consider the grace period of each and choose the one that meshes well with your spending and payment habits.


Source: Credit Cards For People With Bad Credit Rating

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