What is the Grace Period for a Credit Card?

Even if you’ve had your credit card for a while, you may not know what a credit card grace period is. Do you know how long it lasts and if it’s something you should take advantage of? If you have a Discover® Card, you can look at the Discover Cardmember Agreement to learn about the specifics of your own grace period.

What is a credit card grace period?

A credit card grace period is the period of time between the end of a billing cycle and the date your payment is due. Credit card companies aren’t required to provide a grace period on purchases, but it must be 21 days if they do, in compliance with the Credit Card Act of 2009. During the grace period, you’re not charged interest on purchases as long as you start the month with a $0 balance, pay your balance in full by the due date, and don’t take a cash advance or do a balance transfer. However, if you make just the minimum payment, or even a partial payment that exceeds the minimum payment but is less than the entire balance, the grace period won’t apply and interest will be charged.

With Discover, your due date will be at least 25 days from the end of the billing period, or a minimum of 23 days for billing periods that start in February.

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Understand how interest charges are calculated 

Each day, the daily interest charge for your credit card is calculated for transactions, including purchases, balance transfers, and cash advances, using the daily balance plus the applicable daily interest rate. All the daily interest charges are added up to get the total interest charges for a billing cycle. You can use the Discover Credit Card Interest Calculator to help you find how much interest you’ll owe on a given balance and interest rate.

Remember, you may avoid paying this interest on purchases if you pay off the full balance on your account before the payment due date.

Not every transaction has a grace period

Cash advances and balance transfers don’t have grace periods the way other transactions do. Interest will be charged on cash advances (including foreign currency cash advances) and balance transfers starting on whichever comes later: the transaction date or the first day of the billing period during which the transaction is posted to your credit card account.

Also, your new purchases will not get a grace period if you don’t pay your new balance in full and on time each month. This means you’ll be charged the daily interest accruing each day.

Know your credit card grace period dates and deadlines

Knowing your grace period and due dates can help you plan your credit card payment schedule to avoid late fees and interest charges. Be sure to know the date when your bill is due, and pay the full statement balance on time to avoid paying interest on purchases.

Payments made after the due date are late payments, and they may affect your credit score and your current interest rate. Late payments can also impact your ability to get new credit and affect the interest rate you’re offered on new credit products.

Set alerts to avoid late payments 

To help stay on track with making your credit card payments on or before the due date, use Discover’s automatic payments feature to make your payment directly from your bank account. You can choose to make the minimum payment, the minimum payment plus a fixed amount, a different fixed amount of your choice, or the full balance.

Familiarize yourself with the features of your grace period, and make sure you have reminders set with your credit card issuer for your due date. Doing so may help you save money by avoiding interest on purchases as you make your payments on time.