Credit Card Grace Periods

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Cardholder Benefits » Credit Card Grace Periods

Credit Card Grace Periods

Credit Card Grace Periods
April
1

If you carefully read the fine print of your credit card agreement, you must have seen such a point on it as the grace period. Lack of proper credit education drives some people to misinterpret the grace period, leading them to some of the most disappointing mistakes of credit card use.

This article will be of great informative value to both, experienced credit consumers and starters, as grace periods are some of the vaguest terms on your credit card contract. There are three most important things about a grace period that every cardholder should be aware of in order to take advantage of it rather than lose.

Fist, let's give the proper definition to the grace period. In general terms, it is a period of time - usually 20-25 days - before the credit card issuer starts charging interest rate on each of your new purchases. There is nothing simpler at first sight and it is no wonder that lots of cardholders are sure that all purchases are exempt from interest charges for at least 20 days, no matter what your credit report and the state of the balance are.

The reality is different, however, and you are not just always entitled to the privilege of the grace period. In fact it depends on your credit card agreement's provision which may come in three forms:

Your credit card has a typical grace period. Such credit card calculates your average daily balance including new purchases. It means you will be charged credit card interest rates on the new purchases, unless, however, you have paid the previous month's balance in full. A credit card with a typical grace period is a perfect variant for disciplined customers who always pay their bills in full.

However, since quite recently, such cardholders have been experiencing sort of disfavor from their creditors as they tend to never pay interest charges to the company, and so - bring much less revenues than expected.

Your credit card has a full grace period. This card's balance calculation method is an average daily balance that excludes new purchases, and it means full freedom from interest charges on new purchases regardless of whether you paid you previous month's bill in full or not. You still have 20-25 days to pay off the bill without incurring interest.

Such type plastic would be the greatest desire for subprime credit cardholders or just those who tend to be late on credit card bills and drag the balance. But unfortunately, there are not many of such products available on the market today.

Your credit card has no grace period. It makes no difference whether you paid you bill in full or not the previous month. You will still be charged interest starting right from the first purchase you make in the new billing cycle. It will not benefit either to good or bad credit customers, so regardless of your credit rating, try to avoid making such a deal with a credit company.

The types of grace period featured above are the three most important things every cardholder should know about if he/she plans to benefit from their credit card usage.

So, your main goal when making a deal with a company and signing up the contract is to find whether the average daily balance excludes new purchases (which means full grace period) or includes new purchases (which means typical or no grace period). Try to also distinguish typical grace period from no grace period, the latter stating that you will be charged right from the date of your first purchase.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Credit Card Tips For Holiday Shopping 2017

Credit Card Tips For Holiday Shopping 2017

Posted: November 27, 2017

November and December are the busiest months as gift shopping reaches its peak. People rush around looking for the best gifts and the best deals leaving a lot of money in the shops. Holiday season may force you to go over the household ... Continue reading
How to Earn on Black Friday Deals in 2017

How to Earn on Black Friday Deals in 2017

Posted: November 23, 2017

Black Friday is around the corner! Ready, steady, go! But before you go on a shopping spree to catch the jaw-dropping deals and discounts, make sure you maximize them. Did you know that you can not only save on Black Friday, but also earn? ... Continue reading
Autumn 2017: Best Rewards Credit Cards for Thanksgiving Shopping

Autumn 2017: Best Rewards Credit Cards for Thanksgiving Shopping

Posted: November 20, 2017

Thanksgiving is coming, and whether you are hosting a meal or coming as a guest, your spendings are going to accumulate faster than you can notice. A holiday feast is a costly matter – each year Americans spend around $50 on a Thanksgiving ... Continue reading