In finance, a credit card grace period is the time after a specific payment due date during which interest or penalty is not charged. In this case, interest is calculated on a monthly basis rather than daily.
In some cases, some credit cards do not offer grace periods while in others, a grace period of 21-25 days for instance may apply, spanning from the billing date to specific days after. If the due date is on a weekend, the next business day applies as the new deadline.
It is a very convenient feature that allows credit card bearers to pay their credit card balances without paying hefty interests. The longer the grace period the better and credit card issuers should mail the cardholder’s billing statement 21 days before finance charges are assessed for them to take advantage of the period through new purchases.
Credit card grace periods do not apply in balance transfers, convenience checks and cash advances. There are also other conditions that may invalidate the period and force the bearer to pay all the outstanding interest amounts. These conditions differ from issuer to issuer in and the Card act applies
It is important to understand how the grace period works, to avoid misconceptions, which may lead to losses. For instance, one should clear the credit and balance in full before the grace period expires so that the interest rule is waived. Information on the cardholder agreement should be fully understood to avoid inconveniences.
Overall, people can avoid paying interests through the grace period, but does not come without drawbacks that may lead one to an unexpected financial pratfall. Most customers do not understand this concept and they may make decisions unknowingly.
In some cases, a person must satisfy some conditions in order to qualify for the grace periods. If in doubt, a business lawyer can be of help.
No comments:
Post a Comment