Understand Credit Card grace period

Summary: One of the best advantages of credit cards is they offer an interest-free period, also known as the grace period. Learn how it helps you from paying extra interest.

29 Sep 2022 by Team FinFIRST

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One of the significant advantages of credit cards is they offer an interest-free period, also known as the grace period. It helps you manage your finances without paying interest

Credit cards are popular because they offer several benefits. Along with easy fund access, they provide shopping, travelling, lifestyle and entertainment privileges. Another major advantage of using a credit card is you get quick loans interest-free if you pay it in full within the due date. It means the funds you receive are liability-free for a certain time. The interest-free duration is commonly known as the credit card grace period.

What is a credit card grace period?

A credit card grace period is the duration between your purchase date and the due date of the next billing cycle. If you repay your outstanding amount in full during the grace period i.e. before the due date, the card issuing bank doesn't charge you any interest.

Each credit card provider has its terms and conditions regarding the grace period, which you need to verify before acquiring one. While you may not get an interest-free period from a few banks, most credit card issuers offer a month or more grace period.

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How to benefit from the credit card grace period?

You are not charged any interest on your outstanding amount during the grace period. You can enjoy liability-free funds if you pay your credit card balances in full within the due date. In addition, for every expense, you receive rewards and cashback points that you can redeem to enjoy additional discounts and privileges.

Paying your dues in full within the grace period enhances your credit score. You can easily get a credit card with institutions like IDFC FIRST Bank. IDFC FIRST Bank credit cards offer competitive interest rates starting at 0.75% per month and a grace period of up to 48 days.

What if the grace period is missed?

No interest is charged if you are granted a grace period on your card and don't have outstanding balances. In case you have fresh purchases and missed your grace period during the current billing cycle, your outstanding funds start to accumulate interest as per the credit card terms and conditions.

In addition, you must also pay the penalty on your balances like ‘Late Payment Charges’ if you pay after your due date in that billing cycle. Furthermore, the grace period only applies to purchases and online transactions. In the case of cash advances where you withdraw cash using the ATMs, the interest is charged from withdrawal until the due date. But if you get an IDFC FIRST Bank Credit Card, even the cash withdrawal will come at a 0% interest charge up to 48 days.

The credit card grace period applies when you fully pay your outstanding bills within the due date.

Why is the credit card grace period critical?

The grace period helps you save a significant amount every year which otherwise would have been consumed in interest every month. However, you must remember that the grace period is applicable only if you pay the card's outstanding balances in full.

Here are some of the critical aspects of the credit card grace period:

The grace period won't apply to your fresh purchases if you carry balances from the previous billing cycle. You can only enjoy a grace period if you pay your full amount, which results in zero outstanding amounts.
If you fail to pay the bills within the due date, you will be charged interest, and all your new purchases will be forwarded to the next billing cycle.
The grace period applies to purchases and shopping only. If you use your credit card to withdraw cash, you must pay interest from the withdrawal date.

Grace period is one of the best features of a credit card. However, you must be aware of your interest-free period and pay your credit card bills on time to enjoy zero-liability funds.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.