Grace Period

A grace period in credit card terms refers to the time allowed for a cardholder to pay off their credit card balance without incurring any interest charges. This period typically begins at the end of a billing cycle and lasts until the payment due date. The length and existence of a grace period can vary by credit card issuer but is typically outlined in the credit card agreement.

During the grace period, if the cardholder pays their full balance from the previous billing cycle by the due date, they will not be charged any interest on those purchases. This feature is especially beneficial for consumers who wish to use their credit cards for purchases but avoid paying interest by clearing their balances in full each month.

It's important to note that grace periods usually apply only to new purchases; cash advances and balance transfers might not have a grace period, meaning interest accrues from the day of the transaction. Understanding the specifics of the grace period, as outlined in the credit card agreement, is crucial for effective credit card management and avoiding unnecessary interest charges.