Definition
The window between a credit card statement closing and the due date, during which paying the full statement balance avoids all interest. Carry a balance past it and interest applies to new purchases immediately.
Why it matters
The grace period is what makes credit cards free tools for full payers and expensive ones for everyone else. Losing it also removes the interest-free float on new purchases, which few cardholders realize.
Example
A statement closes on the 5th with a due date around the 30th. Paying the full balance by the due date means zero interest. Paying all but $50 forfeits the grace period, and new purchases start accruing interest the day they post.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.