How many days is the grace period available on a credit card? Even those who have been using the card for years remain confused..
Nowadays, almost everyone has a credit card. People use it for everything from shopping to bill payments and online purchases. But many people don't realize its true power. Especially by ignoring features like the grace period, people unknowingly incur the burden of interest and penalties.
Smart use of a credit card isn't limited to managing expenses. It has many hidden benefits that can strengthen your financial health. Let's learn what a credit card's grace period is and why it's important to use it correctly.
What is the Grace Period?
The grace period on a credit card is the time between the end of your billing cycle and the due date. Banks typically allow 18 to 20 days. If you pay the entire balance within this period, you don't have to pay any interest. However, if you don't pay the full amount, you have to pay interest on the remaining amount.
Why is the grace period special?
It allows you to make payments without interest. Making timely payments improves your credit score. Delays increase the risk of late fees and interest. Regular payments strengthen your credit history.
5 Important Lessons About the Grace Period
1. Interest-Free Money
The real benefit of the grace period is realized only if you pay the entire balance on time. If you pay only a partial amount, the bank immediately starts charging interest, which can rapidly increase the debt burden.
2. Consistency is Important
Missing even one payment negatively impacts your credit profile. Problems like late fees, higher interest, and legal notices can arise.
3. No Discount on Cash Withdrawals
If you withdraw cash from an ATM using your credit card, you don't get a grace period. Cash advance fees and interest are immediately charged on such transactions. Therefore, it's best to avoid withdrawing cash.
4. Understanding the Billing Cycle
Every credit card has a different billing cycle. If you make large expenses at the beginning of the billing cycle, you'll have more time to pay. This trick can simplify your financial planning.
5. Planning for Emergencies
A credit card means you're borrowing from the bank. If you don't make payments on time, interest and penalties will be charged. Therefore, always keep track of the due date, set reminders, or turn on auto-pay.
How to take advantage of the grace period?
Pay the entire balance on time.
Spend only on essential items
Avoid cash withdrawals
Understand the billing cycle
Plan for emergencies in advance
Why can your credit score suffer?
If you miss the grace period, the first impact is on your credit score. A poor score means:
Difficulty getting a loan
Higher interest rates
The credit card limit may be reduced
Additional expenses on insurance and other financial products
Conclusion
The credit card's grace period is a great support. Using it wisely saves you interest and penalties, while also strengthening your credit score. However, it's essential to repay the full balance on time, avoid cash withdrawals, and adhere to the billing cycle. Only smart use can make a credit card a true companion to your financial health.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
