Credit card issuers charge interest on balances you carry on your credit card. Fortunately, the majority of credit cards have a grace period that allows you to avoid paying interest. Taking advantage of the grace period allows you to make purchases on your credit card and never pay a penny in interest.

It starts when your billing cycle ends.

The grace period is typically the period of time between the end of your billing cycle and your payment due date. Paying between this time will allow you to avoid paying interest. By law, credit card issuers are required to mail your credit card statement 21 days before your payment due date. This gives you enough time to receive and review your statement and make your credit card payment.

It only applies when you paid in full.

The caveat to the grace period is that you have to pay your full balance to avoid paying interest. If you only pay part of your balance, you’ll be charged interest on the unpaid portion of the balance. To take advantage of the grace period, you must pay the balance that appears on your credit card statement.

Also, if you didn’t pay your full balance the previous month, the grace period doesn’t apply. You won’t get another grace period until you start a billing cycle with a zero balance.

Not all balances have a grace period.

The grace period typically only applies to purchases made on your credit card. Balance transfers and cash advances don’t have a grace period and often begin accruing interest right away. For these balances, you can minimize the amount of interest paid by taking advantage of a promotional interest rate (for balance transfers) or paying off the balance as soon as possible (for cash advances).

It does not extend your payment due date.

Your credit card’s grace period affects the interest you pay, not your payment due date. You’re still required to pay by the due date to avoid late payment penalties. Paying late causes you to lose your grace period and triggers a late fee and possible damage to your credit score.

Check your credit card agreement for the length of your grace period and details on avoiding interest. You can typically find a copy of your credit card agreement on your credit card issuer’s website. Or, you contact customer service to have a copy of the agreement mailed to you.

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