How To Use Your Grace Period To Avoid Paying Interest Bankrate
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Main Menu Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Banking Compare Accounts Use calculators Get advice Bank reviews Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Loans Personal Loans Student Loans Auto Loans Loan calculators Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Home equity Get the best rates Lender reviews Use calculators Knowledge base Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Real estate Selling a home Buying a home Finding the right agent Additional resources Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Insurance Car insurance Homeowners insurance Other insurance Company reviews Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Looking for the perfect credit card? Narrow your search with CardMatch Advertiser Disclosure How to use your grace period to avoid paying interest
Marko Gerber/Digital Vision/Getty Images Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Marko Gerber/Digital Vision/Getty Images Written by Credit Cards Reporter Meredith Hoffman is a personal finance writer covering credit card news and advice at Bankrate. She is originally from Columbia, S.C., and received her bachelor's degree from the Written by Personal Finance Writer Jacqueline is a contributor for Bankrate and has worked with more than a dozen financial brands, including LendingTree, Credit Karma, Fundera, Chime, MagnifyMoney, Student Loan Sept. 26, 2022 Edited by Associate Editor Sept. 26, 2022 Share
Bankrate Logo Why you can trust Bankrate
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate Logo Why you can trust Bankrate
At Bankrate, we have a mission to demystify the credit cards industry — regardless or where you are in your journey — and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to: Meet you wherever you are in your credit card journey to guide your information search and help you understand your options. Consistently provide up-to-date, reliable market information so you\'re well-equipped to make confident decisions. Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you. At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next. Bankrate Logo Editorial Integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate Logo How We Make Money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate Logo Insurance Disclosure
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. ON THIS PAGE
PREV NEXT Nobody enjoys paying credit card interest. Luckily, most credit cards come with a built-in feature that cardholders can use to pay off their balances interest-free: the grace period. can take your balance from manageable to overwhelming very quickly. Paying off your monthly statement balances in full within your grace period is one of the best ways to avoid getting into . As long as you pay off your balance before your grace period expires, you can make purchases on your credit card without paying interest. Here's everything you need to know about grace periods on your credit card. What is a credit card grace period
A credit card grace period is a set period of time that a cardholder has to pay off their balance before their credit card issuer begins to charge them interest. This gives you time after you receive your monthly statement to pay your bill without being penalized. The grace period is a minimum of 21 days, and falls between the time your billing cycle closes and the due date for your payment. Once your grace period ends, both unpaid balances and new balances will begin to accrue interest according to your . Certain types of transactions, such as , are not subject to a grace period and begin accruing interest as soon as the transaction is completed. While some of the offer grace periods that last as long as 25 days, other credit cards do not offer grace periods at all or only offer very short grace periods. of your credit card agreement so you know exactly how long you have to pay off your balance before interest charges begin to accrue. How long is the grace period on a credit card
Thanks to the , lenders are legally required to give cardholders a minimum of 21 days between the end of their monthly billing cycle and their bill due date to pay off their credit card balance before interest charges kick in. Most major credit cards count those 21 days as a grace period, and don't charge interest on that billing cycle's balance until the grace period is over. How to make the most of your grace period
As long as you stay on top of your , you can charge new purchases to your credit card and pay them off before your due date in order to avoid paying interest. But if you want to use your grace period to avoid interest charges, consider taking the following steps: Pay your monthly statement in full and on time
Paying the full amount will help you avoid any interest charges. If you can't pay your statement balance off completely, try to make a smaller payment (not less than the ). Any amount remaining on your statement balance will begin to accrue interest - as will any charged to the card - but the smaller the balance you have, the less you'll spend on interest. Give yourself added time between purchases
If you want to get even more usage out of your grace period, time your credit card purchases to take advantage of your card's billing cycle. Remember, your grace period begins when your billing cycle closes. So if you at the beginning of your billing cycle, you have the full cycle plus the grace period before your credit card issuer will begin charging interest on that purchase. That could give you nearly two months of zero-interest borrowing. Create a budget
It will be easier to manage your monthly expenses if you establish a budget. Additionally, once you understand how to make the most of your grace period, you can treat your credit card like an interest-free loan. As long as you pay your statement balance in full every month before your grace period ends, you won't have to worry about paying interest on any of your purchases. What happens if you carry a balance after your grace period
If you do not pay off your statement balance in full before your grace period ends, you lose the grace period on your credit card. This means that both your current balance and any new purchases will begin accruing interest immediately. After a few billing cycles of full payments, your credit card issuer is likely to reinstate your grace period if you no longer carry a balance. If you'd like to avoid paying interest on your credit card, you have two options. You can pay off your balance before your grace period ends, or you can apply for a zero-interest credit card that offers 0 percent APR on purchases for up to 21 months. Using a can save a decent amount of money if you know you won't be able to pay your balance right away. If you take advantage of that full 21-month window, you can save a lot on interest payments. Interest can add up quickly
Let's look at how quickly interest can add up if you don't have a . If you have an APR of 16.99 percent (and assuming you make no new purchases during the billing period), your daily interest rate is approximately 0.05 percent. So, if your balance is $100 at the beginning of your billing cycle, by the end of the day, your balance will be up 0.05 cents to $100.05. Then the next day, you will be charged 0.05 percent interest again, but on the new higher balance of $100.05 which increases the balance to $100.10 by the end of the day. Then the cycle keeps continuing and the amount you owe in interest grows. Can you extend your grace period
There isn't a hard and fast rule when it comes to extending your grace period. In most cases, you won't be granted an extended grace period simply by asking your issuer. However, you could try requesting a different billing cycle date to buy yourself extra time before interest is applied to your balance. Additionally, you could buy yourself even more time by making purchases with your card immediately after the closing date, and at the beginning of the next billing cycle. As long as you have a plan to pay your balance before its due date, you will be able to carry a balance for as long as possible without being charged interest. The bottom line
The grace period is a lesser-known and often underutilized perk of owning a credit card. While it is as soon as you are able, your grace period can give you a little extra time to pay off your balance in full so that you don't get bogged down in costly added interest. ON THIS PAGE
Written by Meredith Hoffman Credit Cards Reporter Meredith Hoffman is a personal finance writer covering credit card news and advice at Bankrate. She is originally from Columbia, S.C., and received her bachelor's degree from the Univ. of North Carolina at Wilmington. Before joining Bankrate in October 2019, Meredith worked as the news editor of Wilmington’s local newspaper, The Seahawk. Edited by Associate Editor up next Part of Credit Cards Once a 0% intro APR period ends, unpaid balances start to accrue interest. Sep. 22, 2022 Credit Cards There are some clear pros to carrying a balance without paying interest, bu... Mar. 11, 2022 Credit Cards Learn more about why may end up paying interest on a zero percent APR card.... Mar. 21, 2022 Credit Cards Securing a lower interest rate may be as simple as asking your credit card... Sep. 26, 2022 Credit Cards Cards that offer 0 percent intro APR can be excellent tools if you know how... Oct. 20, 2022 Learn more Eligibility and Benefit level varies by Card. Terms, Conditions and Limitat... Nov. 11, 2022