Grace Period? What is Grace Period? The easiest definition of Grace Period is how quickly will the interest meter start running on new purchases. I've seen some credit cards have 20 to 25 day Grace Period and some with 0.
Let me give you an example of 0 day Grace Period. If you go to the store today and buy a new pair of shoes for $100 when will the interest start. Answer today. If your buy something today on March 6 and your bill is due on March 26 you will be charged interest on the $100 from today until March 26 when your payment is received.
In this example your balance will not be paid off since there would be 20 days of interest owed on the $100.
The best advice I can give someone is to look for the longest Grace Period when applying for credit cards. Most offer a 20 day Grace Period. This is a key factor when you are using a credit card you intend to pay off every month.
I had some clients use a credit card for all their purchases of groceries, gas and other purchases during a month. When they would receive their bill they paid the entire balance off. Why did they do this since they had the cash? It was tied to a airline mileage club. Each year they usually received 3 or 4 free tickets by using the card to their advantage.
They did not care about the interest rate since it was 16.99% since they never carried a balance. Is this good for everyone? NO. You need to have the discipline and the income to do something like this every month.
Read more tips in my book "How to Beat Banks and Credit Cards At the Money Game" I want to help people increase their debt strength knowledge since that is the best way to become debt free and financially independent. Go to http://debtstrength.com
Teddy Danfield
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