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Grace Period |
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A Grace Period is a period of time during which a payment can be made or late performance can occur without incurring any late penalties, fees or interest.
Grace Period for Loans:
If you have a loan with a payment Grace Period of 5 days, and a payment was required by August 15 and you didn't actually make the payment until August 19, then you would not be charged any late penalties or fees because you made the payment within the specified Grace Period.
However, if you have a loan or credit card with no Grace Period, and a payment was required by August 15 and you didn't actually make the payment until August 19, then you would be charged whatever late penalties or fees are applicable under the terms of your credit agreement.
A payment received even one day past the end of the Grace Period is considered late. Failure to make the minimum required payment by the end of the Grace Period can have significant and undesirable consequences. For example, you will likely be charged late fees and penalties, and you will also incur a blemish on your credit history, which may make it more difficult and/or more expensive for you to get loans in the future.
Grace Period for Credit Cards:
Grace Period has a different meaning when referring to credit cards.
For example, if a credit card offers an interest-free Grace Period, then this means that you will incur no interest charges for the month if you pay the balance in full before the due date. If, on the other hand, you only paid of part of the balance due, then the remaining balance is carried over into the next billing period. When this occurs, you have not repaid the balance within the Grace Period, and you will have to pay interest on your remaining balance from the original purchase date.
In addition, different types of purchases have different Grace Periods. For example, a purchase of goods from a shop may have a Grace Period until the end of next month, when a credit card payment is due. However, cash withdrawals from your credit card may have no Grace Period, and interest is charged from the date that you obtained the cash.
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Credit Card Definitions > F - M > Grace Period
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