What is a credit card grace period?

• A. The period after the statement date when late fees apply.
• B. The period after the statement date when purchases may avoid interest if the balance is paid in full.
• C. The time you have after a purchase before interest starts.
• D. The period after the statement date when purchases accrue interest if not paid.

Answer: (B)

The grace period is the window after the billing cycle ends when you can pay the full balance by the due date and avoid interest on new purchases. If you pay the entire statement balance by the due date, you’re not charged interest on those purchases. This period typically lasts about 21–25 days, depending on the issuer. Note that it usually doesn’t apply to cash advances or balance transfers, and if you don’t pay in full, interest starts accruing on new purchases from the date they’re made.