For credit cards and similar unsecured credit, the grace period is the time between the end of a billing cycle and the date the full amount borrowed must be paid before financing charges are applied. If you pay the full statement balance by that date, new purchases are not charged interest. A minimum payment keeps the account in good standing, but it leaves a balance, and financing charges then apply to what remains.

Related Lessons

• Click Here for our lesson on Using Credit
• Click Here for our lesson on Credit Cards
• Click Here for our lesson on What Your Credit Report Says About You
• Click Here for our lesson on Break Free From Money Stress with a Budget