Introduction
Most credit cards allow for a grace period, which is the time you have to pay off your balance in full without incurring finance charges. The grace period typically begins on the first day of the billing cycle and ends after a certain number of days, depending on the credit card issuer. Grace periods usually range from 21 to 25 days. A longer grace period gives you more time to pay your balance and avoid interest charges.
Credit Card Accountability Responsibility and Disclosure Act of 2009
The Credit Card Accountability Responsibility and Disclosure (CARD) Act was passed by Congress and signed by President Barack Obama on May 22, 2009. This law builds on the strong first step taken by the Federal Reserve to improve disclosures and end unfair practices.
When You May Not Have a Grace Period
Some types of credit card transactions, such as cash advances and balance transfers, may not allow for a grace period. Therefore, these transactions begin accruing interest as soon as the money is deposited into your account, provided there is no active 0% promotional rate.
Billing Statement Requirements
The credit card issuer must send your billing statement at least 21 days before the payment due date. Your credit card statement may not indicate whether your balance has a grace period, which is a detail you will need to track yourself if you hope to take full advantage of it.
Payment Grace Periods on Loans
Loans also have grace periods for payments, but they are not the same as those associated with credit cards. For a loan, the grace period occurs after the due date but can be fulfilled without penalty. This period typically lasts about 15 days. Be sure to check with your loan provider before assuming you have any grace period at all.
Student loans have a six-month grace period after you graduate or enroll at least half-time. After this six-month grace period, the student loan enters repayment, and you must make a payment each month.
According to the U.S. Department of Education, most loans will accrue interest during the six-month grace period, and you can choose to pay the interest during that time to prevent it from being added to the principal balance.
Was this information helpful?
Source: https://www.thebalancemoney.com/credit-card-grace-period-explained-960699
Leave a Reply