Grace Period on Credit Cards: Everything you need to know

A grace period is one of the many features of a credit card that add to your user experience. Because of this period, you get to access instant credit without any interest charges. This is also why it is also known as the interest-free period.

Read on to know its meaning, benefits, eligibility and more. 

What is a Grace Period?

The grace period is the gap between the credit statement date and the due date to pay the bill. During this time, issuers don’t charge any interest on your purchase amount. This applies to only online and offline transactions, not cash withdrawals.

Most banks offer a minimum of 21-day period of interest-free days, but you can get up to a 45-day grace period for credit cards. Say your credit card company generates the statement on 10th July and your due date is 20th August. Then, you get 41 days as a grace period. 

Note that this applies only if you pay the total due amount. If you pay only the minimum due, the outstanding balance will attract interest. Remember, the grace term doesn’t apply to the carry-over balance from the period cycle. 

Perks of a Grace period 

Here are some of the reasons why a grace period on a credit card is important.

• It allows you to enjoy interest-free purchase 
• You get access to instant funds without needing to repay extra
• You can earn cashback and reward points, which you can redeem for any future spends
• It allows you to manage your monthly budget better without adding to your financial burden 
• Payment within the grace term boosts your credit score 

Who is Eligible for a Grace Period?

Here are the eligibility criteria if you want to enjoy a grace period on your credit card:

• You have to pay the entire billing amount on time
• You have no outstanding balance from your previous bill
• You don’t have a history of defaults or late payments 
• You have no pending dues or unpaid EMIs on the credit card 

If you don’t meet the criteria, you can improve your chances of getting this privilege in one step. Clearing any unpaid or outstanding dues will make you eligible again.

Also Read: Tips to Get Quick Credit Card Approval

What Happens If You Miss the Grace Period?

The consequences of missing the interest-free period depend on whether you’ve made a partial payment. In case you have not paid the complete bill, the issuer will charge a late payment fee and interest on the outstanding amount. 

The unpaid amount and these charges get added to the next month’s statement. In case you have paid only the minimum amount, the outstanding amount will attract interest but you do not have to pay any late payment penalty. 

Until you have paid in full, the remaining billing amount attracts interest, which adds to your financial burden. In both cases, the credit card issuer will take away your privilege of the grace period. What’s more, it also hurts your credit score.

Knowing the meaning of grace period and how it works allows you to better plan your finances and ensure you don’t miss the due date. However, there are other aspects to take into consideration apart from the interest-free period when you’re choosing a credit card.

This includes fees, charges, rewards, discounts and cashback. If you want to enjoy one such card offering all these benefits and more, opt for the Fibe Axis Bank Credit Card. This is a one-of-a-kind card designed to streamline all your credit card payments with the highest security. 

It is India’s first numberless credit card, which also has zero annual and joining fees. It offers flat cashback of up to 3% on all offline and online purchases. Since it’s a RuPay card, you can link with a UPI app and make seamless payments. Download the Fibe App from the Google Play Store or App Store to explore all its benefits and apply!

FAQs on Grace Period in Credit Card

How does a credit card grace period work?

This is the duration between the date of your credit card statement generation and the bill payment date. You are not liable to pay any interest if you pay your complete bill during this period. Most issuers provide at least a 21-day grace period for credit cards.

What is the grace period after the due date of the credit card?

According to the RBI guidelines, you get a 3-day grace period for credit card payments past the due date. In case you missed the due date, but pay the bill within three days it will not incur any late payment penalty or extra charges.

Does the grace period affect your credit score?

Since payment within the grace period on a credit card counts as a timely payment, it can help you boost your credit score easily.