A credit card grace period is the period of time a credit card company gives you to pay your new charges, without having to pay interest on the new balance. The grace period runs from the end of a billing cycle to the next payment due date.
How to use the grace period to avoid paying interest
Since we know that a grace period is basically an “interest-free” period in which you have a certain number of days to pay your bill with no interest, you can essentially use your card interest free provided you pay off the balance before the grace period ends (typically 25 days).
Are Credit Card Companies Required To Provide a Grace Period
No, although nearly all credit card companies provide some sort of a grace period on new purchases.
Not All Transactions have a Grace Period
Certain types of transactions and balances typically do not have a grace period. For example, cash advances and balance transfers don’t typically have a grace period.
All or Nothing
If you want to use the grace period to your advantage, be sure to pay off the entire balance before the grace period ends. Some credit card companies will back-date the interest to the original purchase date if the debt is not paid in full resulting in some hefty interest charges you may not have been ready for.
So obliterating your balance every month sounds pretty simple, but if you are not in the habit of cutting the check each month and reducing your credit card bill down to zero, you may be in a world of hurt come 3 to 6 months down the road. Also, paying in full does not usually give you a break on the costly cash withdrawals and convenience checks they send you in the mail. It is also not uncommon for balance transfers to be omitted from the grace period windows.
Carrying a balance is costly
Carrying a balance of any size into the next billing cycle means that there will not be a grace period on any purchases during the new cycle. The credit card company will begin charging you interest on the new purchases the day you swipe the stripe because you carried over a balance. So even if you only owe $10 on the card at the end of the month, you lose your grace period when you carry over balances from month to month!!