What is a Grace Period?

Mary McMahon
Mary McMahon

A grace period is a period of time in which someone is late with a payment, but penalties are not incurred. There are a number of different types of grace periods, but the important thing for consumers to be aware of is that, as a general rule, as long as a payment is made during this time, they will not be treated differently from people who pay when the bill is due.

No penalties are imposed on credit card bills paid within the grace period.
No penalties are imposed on credit card bills paid within the grace period.

One example of the grace period is the period between the time a credit card statement is issued and the balance or minimum payment is due. During this period, interest will not accrue on new purchases, and the card holder can choose to pay the bill in full and avoid all interest fees. This is usually between 21 and 25 days, depending on the credit card company.

During the grace period of a bill, interest fees and late fees will not be charged.
During the grace period of a bill, interest fees and late fees will not be charged.

Insurance companies often have a two week grace period which ensures that people remain covered even if their payments are late. If a car insurance premium is due on the first of the month, for example, the car insurance will continue to be effective until the 15th, even if the premium is not paid. After this point, nonpayment of the premium causes the policy to lapse.

These period of time can also be built into bills. Rent, for example, often has a five day grace period after the due date during which received payments will not be considered late. Utilities also have one between the time the bill is issued and the date that the bill will be payable. An electricity bill might be issued on the 12th, for instance, but as long as the account holder pays by the 28th, no penalties will be incurred.

Student loans classically have a grace period after graduation during which no payments are due. Students can choose to start making payments during this period, in which case the lender may carryover the unused months for future use. Holding on to the grace period for a time of need is a good financial move for students, as it ensures that they will have some wiggle room in the event of a financial problem.

During a grace period, interest fees, late fees, and other penalties will not be charged, but as soon as the period ends, the fees can start to rack up. For this reason, it is a good idea to pay bills in a timely fashion, to avoid being penalized. If a bill is due on the 15th, for example, the check shouldn't be mailed on the 14th, because this does not allow enough time for the payment to be processed.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Discussion Comments


Is there a grace period for a bill that is due on a Sunday? Could that bill be paid on a Monday, without having to pay a late fee?


The only way I was able to go to college was by taking out student loans. When I graduated or was no longer a full time student, I had 6 months of a grace period before I had to start paying back my loans.

This was a real life saver for me as I didn't have a job lined up before I graduated. If I had not had this grace period, I don't know where I would have had the money to start paying back my loans.

I think it took me about 3 months before I found a job and had a steady income coming in. I started paying back my loans about 4 months after I graduated. I had student loans with more than one company and each of them had the same initial grace period, for which I was very thankful.


I know our mortgage loan grace period is 30 days. If you are over 30 days late with your payment, this will go against your credit, and there will also be extra fees added on.

I think making sure a late payment is not counted against my credit is more important than paying any extra fees. I know that some people push this grace period limit on a regular basis. It seems like they are often behind on all of their bills, and this makes it hard to catch up.

I have found it is a lot easier to pretend like I don't even have a grace period and make my payment before the due date. If I start allowing myself extra time, I find that I start getting behind on everything.


When I am sending payment by check in the mail, I always make sure I allow at least 10 days. Even though I have a grace period on my credit cards, I don't want to be late or pay any more fees than I have to.

This way if something happens and they don't receive the payment, I have time to figure out what happened. I usually like to make my payment before the due date, but there are many times I have been thankful for the grace period.

Sometimes unexpected things come up and I have to wait a little bit longer before I can send the payment. It is nice to know I have some extra time to pay my bill if I need to.

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