Guide to the Credit Card Grace Period

Jason SteeleUpdated December 27, 2022

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The grace period on a credit card gives you time to pay off your purchases without being charged any interest. Generally, it’s 21 days, though some credit card issuers give you a longer period.If you don't pay your balance in full by the end of the grace period (your payment due date) however, you lose that grace period moving forward. As a result, you will be charged interest on any purchases you make during the next billing cycle starting on the day you make them.Understanding how your credit card’s grace period works, and what transactions qualify, can help you get the conveniences of a credit card without ever paying any interest. Here’s what you need to know.

What Is Credit Card Grace Period?

A credit card grace period is the time between the end of a billing cycle and the date your payment is due. The end of the billing cycle is also called the statement date. This is when your monthly credit card statement (or bill) is generated and made available to you online. It may also be physically mailed to your home. The payment due date is about three weeks later. You will not be charged interest during a grace period as long as you pay your balance in full by the due date. The credit card company is essentially lending you money for free. If you don’t pay your credit card balance in full by the due date, however, you end up with credit card debt and will be charged interest on the remaining balance. Not only that, your credit card issuer will eliminate the grace period for the next cycle.This means that you will not only pay interest on the unpaid balance from the previous billing cycle, but will also begin to rack up interest on new purchases immediately after you make them.Recommended: Understanding Credit Card Terms

How Do Credit Card Billing Cycles and Grace Periods Work?

Credit cards operate on a monthly billing cycle. There are two important dates involved in the billing cycle: the statement closing date and the payment due date.The statement closing date is when the credit card company adds up all of your purchases and other account activity from the past month and generates the credit card statement, which is your bill. Your statement is typically available online as soon as it is issued. Any purchases you make after the statement closing date will appear on next month's statement.By law, the payment due date must be at least 21 days after the statement closing date, and be on the same day of each month. This is when you must pay at least the minimum amount owed to avoid a late fee. You may also choose to pay the entire statement balance. This is the total amount you owed on the closing date — the day the statement was generated. (Keep in mind that when you look at your statement online, your "current balance" might be higher than the statement balance if you used your card after the closing date.) If you pay your entire statement balance by the due date, then a grace period takes effect for the next billing cycle. Once the grace period starts, you will not be charged interest on new purchases until that billing cycle's due date. And, if you pay that cycle's statement balance in full by the due date, the grace period renews again.If you continually pay your full statement balance by the due date, you will be able to utilize your credit card interest-free.Recommended: When Do Credit Card Companies Report to Credit Bureaus?

Limits on Credit Card Grace Periods

Grace periods do have some limitations. For one, they generally do not apply to cash advances or balance transfers. It’s also possible to lose your credit card’s grace period. This can happen if you don’t pay your full balance by the due date. When you lose your grace period, you’ll begin to accrue interest on purchases starting on the date of the transaction.Fortunately, even if you lose your grace period, you can usually get it back by paying your balance in full and on time once again. The time it takes to restore your grace period through on-time payments of the full balance varies by credit card. You may need to pay your statement balance on time and in full for several consecutive billing cycles to get a grace period back.

How Long Is the Typical Grace Period for a Credit Card?

Credit card issuers are not required to give a grace period. However, those that do must provide at least 21 days under federal law. Typically, grace periods range between 21 and 25 days from the end of the billing period.

Determining Credit Card Grace Period Eligibility

Although every credit card is different, you will typically only qualify for a grace period if you pay your statement balance in full. If you continue to pay your bills in full and on time, the grace period will keep on renewing and you won’t owe any interest on your charges.You can find out if your card offers a grace period by referring to your cardholder agreement. You’ll want to look at the box at the top of the agreement where fees and annual percentage rate are listed. In the section on "paying interest," it will typically say how long it will be between the end of the billing cycle and your payment due date. If the card has a grace period, it will also state that you will not be charged interest if you pay in full by the due date each month.If you’d rather not read any fine print, you can simply call the customer service number on the back of your card and ask for details about your card’s grace period.

Types of Transactions Eligible for Credit Card Grace Period

Generally, only the purchases you make with your credit card are eligible for the grace period. Grace periods typically do not apply to credit card cash advances, using checks your credit card issuer provides, or to balance transfers (with the exception of 0% balance transfer offers). With these transactions, you'll typically begin accruing interest immediately. In addition, the interest rate may be higher than what your credit card charges for unpaid balances.

Can You Lose Your Credit Card Grace Period?

Yes. Generally, you will lose your credit card grace period if you don’t pay your bill on time and in full. If you carry a balance over to the next billing cycle, that balance will not benefit from a grace period. And, any new purchases you make will start incurring interest right away.

Tips for Using a Credit Card Grace Period to Your Advantage

Here are some ways to get the most out of your credit card’s grace period.

Not Carrying a Balance

If you pay your credit card statement balance in full by the due date every month, your grace period continually renews and you will never pay interest on purchases. By doing this you are essentially getting an interest-free loan from a credit card issuer.

Timing Your Purchases

If you have a large upcoming purchase to make, you may want to time it for right after your billing cycle ends. This will give you nearly a month before the charge shows up on your statement. You then have at least another three weeks before you have to pay that bill. Doing this effectively extends your grace, and may allow you to get two (or more) paychecks in the bank before you have to pay for that large purchase without ever paying interest on it.

Synching Your Credit Cards

If you have more than one credit card, the statement dates and due dates (and, therefore, grace periods) are likely different, even if the cards were issued by the same company. Some issuers will allow you to change your payment due date. This can make it easier to manage your payments and grace periods because you won't have to memorize multiple dates.

The Takeaway

Your credit card’s grace period allows you to make purchases and then have some time before you need to pay those charges without incurring any interest. If you routinely pay your card in full and on time, you can essentially create a “permanent” grace period. This allows you to enjoy all the advantages of a credit card without any of the costs. If you’re thinking about getting a new credit card, Lantern by SoFi can help. With our online credit card marketplace, it’s easy to compare multiple credit card offers(including no-fee, rewards, and credit-building cards) matched to your needs and qualifications all in one place.

Frequently Asked Questions

What is the grace period for credit cards after the due date?

What happens if I am late on my credit card payment?

What is considered a late payment on a credit card?

How can I avoid paying a credit card late fee?

iStock/Georgii Boronin

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About the Author

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.

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