When you start looking for the credit card that meets your needs, there are several things you will want to look at. This list includes things like annual percentage rate (APR), cash advance rates and fees, annual fees for using the card, and the grace period the company offers to its customers. Understanding your card’s grace period is important because it can save you a lot of money in the long run.
In simple terms, the grace period you are allowed is the number of days you have to pay your bill in full without incurring a finance charge. An example of this could be if the card company indicates that you have 25 days from the statement date to pay your old balance in full before the due date.
The statement date will always be indicated on the invoice, and that is the date you should use to calculate the grace period.
What this means is that if you pay your balance before this date, you will not have to pay additional finance charges. It is simply the cut-off date or the deadline, if you wish, to pay the balance without incurring additional finance charges.
You should understand that the number of days that a company allows as a grace period may vary from company to company. For this reason, you should check all requests for the correct number of days.
It is also important to understand that in many cases there is no grace period for cash advances or balance transfers. When this is the case, the interest charges begin immediately and you will have to pay those charges regardless of how quickly you pay off the balance of the cash advance. For the most part, grace periods only apply to new purchases you make with the card, so be careful with cash advances and know in advance what the charge will be if you use that benefit.
Another issue to be aware of is when you transfer any part of your balance from the previous month. In some cases, and this varies from business to business, you may not have a grace period for new purchases you make. What this means is that interest may be charged to you when you make a new purchase and this may be in addition to the interest charged on the unpaid balance.
To find out how your credit card company treats grace periods, you should read their policy that will be on your bill. It is usually located in an area called the “purchase balance calculation method.” Some of the terminology used in these sections can be confusing to many people. If you have any questions about how charges are calculated or how the grace period works, you can call and ask for guidance. It is much better to know than not to know. In this way, you can take advantage of the grace period.