A grace period is the time between your statement closing date and due date, usually at least 21 days. Pay the full statement balance by the due date and you generally pay no interest on purchases. Pay less and you can lose it for that month and the next. Cash advances usually have no grace period.
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Here's one of the best deals in personal finance, hiding in plain sight: most credit cards let you borrow money interest-free for weeks at a time. All you have to do is follow one rule. That interest-free window is called the grace period, and once you understand it, you can use credit cards every month without ever paying interest.
Here's what a credit card grace period is, how long it lasts, what it does and doesn't cover, how you can lose it, and how to make sure you never do.
What is a credit card grace period?
According to the Consumer Financial Protection Bureau (CFPB), a grace period is the time between the end of a billing cycle and the date your payment is due. During that time, you may not be charged interest, as long as you pay your balance in full by the due date.
In practice, that means a purchase you make early in a billing cycle can go weeks before your payment is due, and if you pay the full statement balance on time, you pay nothing extra for that float.
One important detail: card issuers aren't required to offer a grace period. Most cards do offer one on purchases, but check your cardholder agreement to be sure.
How long is a credit card grace period?
Typically at least 21 days. Under federal rules, card companies must have procedures to make sure your bill is mailed or delivered at least 21 days before the payment is due. So the gap between your statement closing date and your due date is usually 21 days or a bit longer, depending on your issuer.
A quick example
- October 5: Your billing cycle ends and your statement closes with a $400 balance.
- October 5 to October 30: Your grace period. Your statement shows a due date of October 30.
- By October 30: You pay the full $400 statement balance. No interest is charged on those purchases.
A purchase you made on September 6, early in that cycle, effectively had more than seven weeks of interest-free time. Not bad.
What the grace period covers (and what it doesn't)
Grace periods generally apply only to purchases. The CFPB notes that if you use your card for a cash advance or a convenience check, you generally start paying interest from the date of the transaction.
- Usually covered: Regular purchases, in stores and online.
- Usually not covered: Cash advances, convenience checks and some cash-like transactions.
- Depends on the offer: Balance transfers often follow their own terms, such as a promotional rate.
For how interest works when the grace period doesn't apply, see What Is APR on a Credit Card?
How you lose your grace period
The grace period has one condition: pay the full statement balance by the due date. Pay less, and the CFPB explains that you'll be charged interest on the unpaid portion, plus interest on new purchases starting from the date each purchase is made.
That second part surprises people. Once you carry a balance, even brand-new purchases can start accruing interest immediately. And the CFPB warns that if you pay in full some months and not others, you may lose your grace period for the month you don't pay in full and the month after.
Getting it back
Issuers generally restore the grace period once you pay your balance in full again, sometimes for one cycle, sometimes two. Because interest accrues daily, you might see a small leftover interest charge on the statement after you pay off a balance. Pay that too, and you should be back in the clear. Your cardholder agreement spells out your card's exact rules.
Grace period vs. late payment: not the same thing
A grace period isn't an extension of your due date. If you pay after the due date, the payment is late, even by a day, and you could owe a late fee and lose your grace period.
The credit score side works on a different clock. According to Experian, creditors generally report a late payment to the credit bureaus only once it's at least 30 days past due. Once it's reported, it can stay on your credit report for seven years. Payment history is the biggest part of a FICO Score at 35%, so this is the one to avoid at all costs.
In short: pay late and you lose the grace period and may pay a fee. Pay 30 or more days late and it can also hurt your credit.
Statement balance vs. current balance: which one to pay
To keep your grace period, you need to pay your statement balance: the amount owed when your billing cycle closed. Your current balance includes anything you've charged since, which isn't due yet.
- Minimum payment: Keeps the account current, but you lose the grace period and pay interest.
- Statement balance: Keeps your grace period. This is the target.
- Current balance: Also works, just pays some charges early.
How to never lose your grace period
- Set autopay to the full statement balance. This is the most reliable protection there is. Here's how to set up autopay the right way.
- Know your due date and your issuer's cutoff time. A payment made late in the evening may count for the next day.
- Avoid cash advances, which usually start charging interest right away.
- Keep a small cash cushion in the checking account autopay draws from, so a payment never fails.
- Check each statement for unexpected charges before autopay runs.
Paying in full and on time also keeps your utilization low and builds positive payment history. See our guides to credit utilization and building credit with a credit card.
Tiny charges, zero interest
The grace period is what makes small recurring charges such a smart way to keep cards active. Credicated places a tiny recurring charge on each card you choose. With autopay set to the statement balance, each charge is paid in full within the grace period, so it never costs you interest, and the card stays in regular use instead of sitting idle where it could be closed for inactivity.
See how it works, or read why unused cards get closed and how to prevent it.
Frequently asked questions
Do all credit cards have a grace period?
No. Issuers aren't required to offer one, though most cards provide a grace period on purchases. Check your cardholder agreement.
How many days is a credit card grace period?
Usually at least 21 days, because issuers must send your statement at least 21 days before the payment is due. Some cards offer a little longer.
Is there a grace period on cash advances?
Generally no. Interest on cash advances usually starts on the day of the transaction.
Can I pay after the due date if I'm within a grace period?
No. The grace period ends on the due date. A payment after that is late and may come with a fee and the loss of your grace period.
Why did I get charged interest after paying in full?
If you carried a balance the previous month, you may have lost your grace period, so interest accrued until your payment posted. Paying in full again typically restores the grace period within a cycle or two.
This article is for general educational purposes and isn't financial advice. Grace period terms vary by card; review your cardholder agreement for the details of your account. Credicated is not affiliated with the CFPB or Experian.
A grace period isn't an extension of your due date.