Your Credit Card is a powerful financial tool that not only provides the convenience of easy spending but also many
privileges in travel, lifestyle, entertainment, and shopping. Credit cards are like Personal Loans but with the
major difference that they give you an interest-free period. For instance, the Axis Bank Credit Card offers a 20–50
day grace period along with numerous monetary benefits, like a no-joining fee and an annual fee.
Let's understand what a grace period is for a Credit Card for clarity on your payment timelines.
What is a Credit Card grace period?
A Credit Card grace period is the time gap between your purchase date and the due date of your next billing cycle. No
interest is charged during this period, provided you pay the full due amount on or before the due date. This applies
to online spending and card swiping. For cash withdrawals, interest is charged from the same day.
Suppose your Credit Card billing cycle is 15th Jan to 15th Feb and the due date is, say 25th Feb. If you
use the Credit Card for a purchase
on 16th Jan then you will have 40 days until the due date to repay the amount. No interest is charged during this
time. Similarly, if you use the card on 15th Feb, you will have 10 days to repay it without interest.
How to get your grace period privilege back?
The Credit Card payment grace period comes with only one condition. You have to pay the entire amount due on or
before the due date. If you pay only partially or fail to pay entirely, you will lose the grace period from the next
billing cycle. You will pay interest on the outstanding amount, late fee payment charges and also pay interest on
every purchase from the next billing cycle.
In such a scenario where you lose the Credit Card grace period, it is best to keep paying the amount due in full for
several months continuously. Once you make full and timely payments, your Credit Card provider will most likely
reactivate the grace period.
Benefits of the Credit Card grace period
Below are the benefits of a credit card grace period. Let's take a look:
- Settle your balance without accruing interest on purchases throughout the billing cycle.
- Align your payment with your budget and cashflow.
- Better management and allocation of funds.
- Improved credit score through
responsible use of Credit Card.
Apart from this, you can enjoy many rewards and cashback schemes that will give you additional discounts. For
example, the Axis Flipkart Credit Card gives up to 5% cashback on online spending and many other cash
benefits. Using your Credit Card wisely will let you enjoy the maximum grace period on your Credit Card.
Consequences of failure to pay the bill before the grace period ends
If you do not pay or even pay partially by the due date, you will lose the benefit of the Credit Card payment grace
period. Suppose your due date is 11th March and the outstanding amount is ₹5000. But you pay just ₹2000. If you use
your Credit Card on 12th March, you will start accruing interest immediately.
By your next due date, April 11th, you will have to pay the entire previous outstanding amount with interest and all
the amounts spent after 11th March with interest and late fee payment charges. If you continue paying partially or
fail to pay entirely, you will bear heavy interest, and in some cases, the bank may stop your Credit Card facility.
Tips to make the most of your Credit Card grace period
- Get to know your Credit Card’s billing cycle. Understanding the start and end dates allows you to plan your purchases and payments more efficiently.
- Consider making purchases immediately after your billing cycle begins. This approach allows you to pay off your balance without incurring interest.
- Use reminders or automated payments to ensure you never overlook a due date. Missing a payment can cause you to lose your grace period and face interest charges.
- Monitor your Credit Card statements to monitor spending and spot errors. This habit helps you stay on budget and avoid extra charges.
- Avoid cash advances; they do not come with a grace period and start accumulating interest immediately.
- Maintain a low utilisation ratio (ideally below 30%) to manage your credit better and avoid high interest fees.
- The grace periods for Credit Cards can differ from one card to another. Read and understand your card’s terms and conditions to avoid unwelcome surprises.
Also Read: Credit
Card minimum amount due: Meaning, calculation and importance
Conclusion
By paying attention to due dates, avoiding interest charges, and strategically timing your purchases, you can make
the most of this grace period to effectively manage your finances and maximise your benefits.
FAQs
How many days late can a Credit Card payment be?
A Credit Card payment is deemed late if it isn't settled by the due date. Generally, it won't be reported to credit bureaus until it's 30 days overdue. Paying within this timeframe can help maintain your credit score, although late fees may still be incurred.
How do I calculate my Credit Card grace period?
To assess your Credit Card due date grace period, check the statement closing date and the due date for payment. The grace period is generally 21-25 days; ensure you pay your balance in full by the due date to avoid interest.
What is the grace period for Credit Cards as per RBI?
The Reserve Bank of India mandates that all banks must grant customers a Credit Card bill payment grace period of at least 3 days after the payment due date before enforcing any late payment penalties.
Disclaimer: This article is for information purpose only. The views expressed in this article
are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd.
and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader
for taking any financial decisions based on the contents and information. Please consult your financial advisor
before making any financial decision.
