What is a grace period on a credit card?

A grace period on a credit card is a period of time after an account statement is sent to the cardholder during which the cardholder can pay off the balance of the statement without incurring a finance charge. This period typically lasts between 21 and 25 days, although this varies depending on the specific credit card and lender. In California, the grace period must be at least 21 days, as stated in the California Credit Card Law. This law also states that card issuers must inform the cardholder of the length of the grace period in writing, within the terms and conditions of the credit card agreement. As the cardholder, it’s important to review and understand the length of the grace period. If a cardholder makes a purchase or balance transfer during the grace period, then the grace period is shortened and the purchases are subject to a finance charge, even if the cardholder pays the entire statement balance on or before the due date. If a cardholder makes any payments during the grace period, then the cardholder may only be entitled to a partial grace period for that statement. It’s important for cardholders to pay attention to the length of their grace period and the terms and conditions of their credit card agreement in order to keep their finances in order. Ultimately, it’s best to pay off the full balance of each statement before the due date to avoid any finance charges.

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