Glossary
Grace Period
A window when interest or penalties don't apply — on cards, between statement and due date; on student loans, after leaving school.
A grace period is a window during which interest or penalties that would normally apply, don’t. The two you’ll actually encounter:
Credit cards. Between the statement closing date and the due date — legally at least 21 days — new purchases accrue no interest if you pay the statement balance in full. This is the mechanism that makes cards free for full-balance payers despite 25% APRs. The catch: carry any balance past the due date and most issuers suspend the grace period entirely, charging interest on new purchases from the day of purchase until you’ve paid in full for a cycle or two. A card being paid off is more expensive to use than a clean one — one reason payoff plans (see the credit card payoff calculator) work best on cards you’ve stopped charging.
Student loans. Federal loans give six months after leaving school before repayment begins. On unsubsidized loans, interest still accrues during this window and capitalizes — joins the principal — when repayment starts. Payments made during grace, even interest-only ones, prevent that capitalization and shrink every payment that follows (model the effect in the student loan calculator).
The general rule: a grace period is free time only if you know exactly which clock it stops.
Related calculators
- Student Loan CalculatorCalculate your monthly student loan payment, total interest, and how much faster extra payments clear the debt. Works for federal and private loans.
- Credit Card Payoff CalculatorSee when your credit card will be paid off with a fixed payment — and what minimum payments would really cost you in years and interest.