Have you ever wondered when your credit card starts to charge you interest after you have made a purchase? By staying within the “grace period,” or the interest free period, you avoid paying any interest charges. Here’s the basics of what an interest free grace period is:
- A grace period is typically 21 days long, in which you do not have to pay any credit card interest.
- For new purchases, the grace period officially starts on the last date that is identified on your credit card billing statement.
- When you receive your credit card statement, you need to pay the balance in full, before the billing due date.
- For example, if your billing statement period (the time in which you made purchases) is from January 1 to 31, you will then have until February 21 (21 days later) to pay off your bill in full to take advantage of the interest free grace period.
- Grace periods do not apply to cash advances or balance transfers.
The bottom line is, always try to pay off your credit balances in full to avoid interest charges. Credit can be a wonderful tool that provides convenience and helps build your credit rating, allowing you to eventually gain more access to credit, such as a mortgage. However, always try to use it wisely and responsibly.
For more information on credit card fees and how interest is charged, check out the Financial Consumer Agency of Canada site.