Q.  What is a grace period?

A.  In relation to credit cards, a grace period is the number of days you have before a credit card company starts to charge you interest on new credit purchases. It is the time between the closing date of the billing cycle and the due date, or date by which you have to pay the balance in full and avoid finance charges. Most grace periods are 20 to 25 days.

Q.  Why should I be concerned about a grace period?

A.  You should be concerned about the grace period because it can have a big impact on the amount you pay in finance charges for using a credit card. Most credit cards have a grace period. However, you benefit from the grace period only if you pay the entire balance in full by the due date. (One exception: American Express Optima True Grace® is the card which gives cardholders at least 25 days grace period on all new purchases, even if the previous month's balance was not paid in full.)

Q.  How can I determine if I have a grace period and the number of days in the period for my credit card?

A.  Look on your most recent billing statement. It is usually printed on the back in very small print.

Prepared by Cathy Faulcon Bowen, assistant professor, Department of Agricultural and Extension Education.