Your credit card balance will usually come with a grace period. That’s a period of time that you are able to pay your credit card balance in full without being charged interest. If you pay your credit card balance completely before the end of the grace period, you won’t receive a finance charge. However, any portion of your balance that’s not paid by the end of the grace period will be charged interest.
Grace Period Length
Grace periods vary by credit card, but generally range from 20 to 25 days after the end of the billing cycle. A longer grace period is better because it gives you more time to pay your credit card balance and avoid paying interest. Your credit card issuer is required by law to mail your billing statement in enough time to allow you send your payment before the grace period ends.
Exceptions to Grace Periods
You may not receive a grace period in certain circumstances. If you started the billing cycle with a balance, you typically won’t have a grace period, not even on new purchases. In addition, cash advances and balance transfers may not have a grace period. When your credit card balance doesn’t have a grace period, finance charges begin accruing immediately. Unless you pay your balance the same day you make the charge, then you’ll pay some amount of finance charge.
You might consider using a credit card with a $0 if your regular credit card already has a balance and you want to avoid interest on a specific purchase. Always keep at least one credit card that’s balance-free, so you can take advantage of the grace period on that card and avoid paying interest.
Know Your Grace Period
Some credit cards do not have a grace period at all. Before you sign up for a credit card, you can find out the grace period by reading the credit card disclosure. All credit card offers are required to include a disclosure that gives details about the credit card including the grace period and interest rate, among other things. On your existing credit card, you can usually find the grace period on the back of your credit card statement.