While you may have had your credit card for a while, do you know what a “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.

How to Use Your Credit Card’s Grade Period

Consider these features of a credit card’s grace period:

  1. What is the Grace Period on a Credit Card?
  2. Understand Discover Interest Charges on Purchases
  3. Not Every Transaction Has a Grace Period
  4. Know Your Grace Period Dates and Deadlines
  5. Make On-Time Payments to Avoid Paying Interest on Purchases 

1. What is the Grace Period on a Credit Card?

If you pay your statement balance on time each month, the grace period is the period of time between the end of a billing period and the date your minimum payment is due, and during this time you may pay your credit card bill without paying interest—at least on new purchases. 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.

Your grace period will be no less than 21 days, in compliance with the Credit CARD Act of 2009. With Discover, your grace period 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. 

2. Understand Discover Interest Charges on Purchases 

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.

The daily balance equals the beginning balance plus the daily interest charges on the previous day’s balance, plus new transactions and fees, less new payments and any credit adjustments. The daily interest rate is simply the rate charged for that transaction category, divided by 365. The daily balance multiplied by the daily interest rate equals the daily interest charge.

All the daily interest charges are added up to get the total interest charges for a billing period. Remember, you may avoid paying this interest on purchases if you pay off the full balance on your account before the due date.

3. 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 account.

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

4. Know Your Grace Period Dates and Deadlines

Knowing your grace period and due dates help you plan your 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. This could impact your ability to get new credit, and also affect the interest rate you’re offered on new credit products.

5. Make On-Time Payments to Avoid Paying Interest on Purchases 

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 of your due date. Doing so may help you save money by avoiding interest on purchases as you make your payments on time.

Published November 16, 2015.

Updated July 14, 2021.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.