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A Grace Period is a period of time during which a
payment can be made or late performance can occur
without incurring any late penalties, fees or
interest.
Grace Period for Loans:
If you have a loan with a payment Grace Period of
5 days, and a payment was required by August 15
and you didn't actually make the payment until
August 19, then you would not be charged any late
penalties or fees because you made the payment
within the specified Grace Period.
However, if you have a loan or
credit card with no Grace Period, and a
payment was required by August 15 and you didn't
actually make the payment until August 19, then
you would be charged whatever late penalties or
fees are applicable under the terms of your credit
agreement.
A payment received even one day past the end of
the Grace Period is considered late. Failure to
make the minimum required payment by the end of
the Grace Period can have significant and
undesirable consequences. For example, you will
likely be charged late fees and penalties, and you
will also incur a blemish on your
credit history, which may make it more
difficult and/or more expensive for you to get
loans in the future.
Grace Period for Credit Cards:
Grace Period has a different meaning when
referring to
credit cards.
For example, if a credit card offers an
interest-free Grace Period, then this means that
you will incur no interest charges for the month
if you pay the balance in full before the due
date. If, on the other hand, you only paid of part
of the balance due, then the remaining balance is
carried over into the next billing period. When
this occurs, you have not repaid the balance
within the Grace Period, and you will have to pay
interest on your remaining balance from the
original purchase date.
In addition, different types of purchases have
different Grace Periods. For example, a purchase
of goods from a shop may have a Grace Period until
the end of next month, when a credit card payment
is due. However, cash withdrawals from your credit
card may have no Grace Period, and interest is
charged from the date that you obtained the cash.
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