How To Use Your Grace Period to Avoid Paying Interest

While credit cards can be an ultra convenient financial tool, the high interest rates they come with could mean that you’re paying more than you bargained for. Luckily, you have some breathing room since credit cards come with a grace period. Plus, if you make a payment well within this time, you may not have to worry about interest charges at all.

What Is a Credit Card Grace Period?

A credit card grace period is the time between when the billing period ends and when payment is due. During this time, you may not be charged interest if you pay off the balance of the bill by the due date. Essentially, the statement date ( at the end of the billing period) is when credit card companies send a credit card statement and the time when your grace period starts. The grace period ends on your payment due date.

Here’s a closer look at the two dates involved in a credit card grace period:

  • Statement date: This date is when your credit card issuer calculates the total amount of all your transactions within the billing period, such as purchases, refunds, payments, and cash advances. It then uses this information to create your credit card statement or bill, and will show the amount you’ll owe before the payment due date.
  • Payment due date: This is when the credit card issuer will have to have received your payment. By law the payment due date needs to fall on the same day each month. Unlike other types of loans, the payment due date is when the payment (at least the minimum stated on your credit card statement) needs to be paid on your credit card.

Under federal law, credit card issuers don’t have to give you a grace period but if there is one, it needs to be 21 days. Depending on your credit card issuer, you’ll receive a grace period anywhere from 21 to 25 days .

If you’re unsure of how long your grace period is, look at your credit card agreement — it should be around where you see the annual percentage rate (APR) and fees are listed. Or, you…

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