Grace Period & Credit Cards

Grace Period in its simplist terms would be how soon interest starts building on purchases. A Grace Period of 0 days would mean interest starts the next day after the purchase. So if you bought a new pair of pants today for $100 there would be interest owed by the time you receive your statement. If you only paid the $100 there still would be a balance.

For easy math let’s say your interest is 12% which means over 12 months you would pay $12 in interest on the $100 purchase. Once again this assumes you continue to owe $100 for the entire year. In this example you would have $1 of interest on the pair of pants you bought. This is an example of a Grace Period of 0 days. Most credit cards have more than 0 days.

A good Grace Period would be at least 20 days for new purchases. Where do you find the Grace Period on a new account application? It would be found on the back of your application. There is a universal box which shows or explains the details of the credit card. One box discloses the Grace Period for that credit card.

The longer the Grace Period the better for you the customer. I have seen this vary from company to company. I’m sure you have credit cards that you have no idea of the Grace Period on most cards. An easy solution is to contact your credit company for that information. They should be willing to let you know the number of days you have for new purchases. If not, you may want to find a new credit card.

I hope this helps when you are reviewing your credit card applications. Grace Period is usually something no one looks at since they are usually most concerned about the interest rate.

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