Credit Card Grace Period: What Is It & How To Use It?

A credit card grace period is a nifty little feature that all credit card issuers offer to cardholders. Knowing what it is and how to utilise it effectively can help you use your credit card more efficiently and give you more time to repay your outstanding obligations.

So, what is the grace period of payment on a credit card? Continue reading to learn about this unique concept and how you can put it to good use.

What is the Grace Period of Repayment on a Credit Card?

To put it simply, the grace period in a credit card extends from the end of the billing cycle to the due date of payment. You won’t be charged any interest on your outstanding amount during this period.

However, this holds true only if you make your outstanding bill payments in full on or before the due date of payment. Delay in making a payment, even by a single day, can cause you to lose this credit card interest-free period.

This default will directly lead to your unpaid outstanding amount incurring interest until you make the repayment in full. That’s not all. You will also incur interest on any new purchases you make using your credit card as soon as you make the said purchases.

How to Effectively Use the Credit Card Grace Period?

• Now, when you use a credit card for purchases, you don’t always have to repay the amount immediately. As you’ve already seen above, credit card companies usually give you a few days' time from the end of the billing cycle to clear your dues through the credit card grace period.
• By efficiently utilising this period, you can effectively give yourself more time to repay your credit card dues. Wondering how? By simply timing your purchases. Let’s look at how you can do this through an example.

Suppose you have a credit card whose billing period starts from the 14th of a month to the 13th of the next month. And that the credit card grace period that your card issuer provides you is 20 days. Now, let’s take up three scenarios -

Scenario 1: You make a purchase on the last day of the billing period

Let’s say you wish to purchase a high-end laptop worth Rs. 1,00,000. Now, you decide to purchase this product on August 13, 2022, which is incidentally the last day of the July-August billing cycle. Since you have a credit card interest-free period of 20 days from the end of the billing cycle, your due date would fall on September 02, 2022.

Going by this example, you would have 20 days to repay Rs. 1,00,000 you spent on your credit card to purchase the laptop.

Scenario 2: You make a purchase around the middle of the billing period

Now, let’s take up another scenario. Here again, you wish to purchase the same high-end laptop worth Rs. 1,00,000 using your credit card. However, this time, the date of purchase is August 28, 2022, which is right around the middle of the August-September billing cycle. For this billing cycle, the due date would fall on October 03, 2022.

In this scenario, you would have 36 days (from August 28, 2022 to October 03, 2022) to repay Rs. 1,00,000 you spent to purchase the laptop.

Scenario 3: You make a purchase on the first day of the billing period

Here’s a third scenario. Say that you purchased the high-end laptop worth Rs. 1,00,000 using your credit card on September 14, 2022, the first day of the new September-October billing period. The due date for this would fall on November 02, 2022.

In this scenario, your credit card grace period would be 49 days (from September 14, 2022 to November 02, 2022). This would mean that you would only have to repay the Rs. 1,00,000 that you spent on that laptop 49 days after the date of purchase.

As you can clearly see, simply timing your purchases right can significantly extend your credit card interest-free period by almost 29 more days. This gives you enough time to get the funds ready for repayment. Therefore, the next time you wish to purchase a big-ticket item, make sure to buy it on the first day of your new billing cycle. This way, you can maximize the credit card grace period you enjoy.

Conclusion

This sums up all the key details about the grace period of payment on a credit card. Keep these pointers in mind and ensure that you make the most of the interest-free period. However, you must also be careful and pay your bill entirely before the due date to avoid exorbitant interest charges.

Frequently Asked Questions

1. What is the grace period on a credit card?

The credit card grace period or credit card interest-free period is the window of time between the date of credit card statement generation and the due date by which you need to pay the bill. During this period, no interest is charged on the outstanding balance.

2. How many days of grace period do you get for credit card payment?

The grace period for credit card payment varies from one type of card to another. Usually, this period is around 20 days, but it can also extend to about 24 days.

3. Is there a grace period for credit card payments?

Yes, there is a grace period for credit card payments. This interest-free period starts from the credit card statement generation date and extends up to the due date for paying the bill.