When paying bills, consumers typically have certain grace periods to pay off the balance after their payment due dates have already passed without going into default. Within the span of the grace period, the borrowers will be able to pay back their debts before any late fees or other finance charges are imposed. Penalties are typically withheld or waived during the grace period, giving consumers a chance to pay off the debt before fees come into play.
Insurance companies, credit cards, auto loans, student loans, and countless other lenders usually offer grace periods to their borrowers. The length of the grace period typically varies based on the type of loan or debt. Student loans usually have a grace period that lasts until several months after the student graduates or drops below half-time enrollment. To avoid paying interest on their credit card purchases, consumers must pay off the balance of their debt in full within the grace period. If a credit card has a grace period, the Credit CARD Act of 2009 requires that the term lasts a minimum of 21 days. Not all credit cards come with a grace period, so consumers should be extra careful to know the details and the fine print before their first bill comes due.