Grace Period

Grace Period
A grace period is the amount of time you’re given to make a late loan payment without penalty.

What is a Grace Period?

A grace period allows you to make late loan payments without suffering a penalty. Grace periods vary between loans and lenders. Insurance policies and credit cards also have their own form of grace periods.

How long is a Grace Period?

Fifteen days is common, but the length varies.1 Some loans have no grace period at all, while the grace period on others might be as long as a month.

What is the Grace Period for a credit card?

The grace period for a credit card refers how much time you’re given to pay your bill. During the grace period, you will not be charged interest on your balance. If you always pay your credit card bill within the grace period, you’ll never have to pay interest.

Be aware, however, that cash advances you take out through your credit card typically do not come with grace periods. With cash advances you’re charged interest immediately. Your cardholder agreement provides details about interest and grace periods, so be sure to read it if you need any clarification.2

What is the Grace Period for insurance payments?

When it comes to insurance payments, grace periods function differently than they do for loans. The grace period refers to the coverage you receive, and not the payments you make. So if your payment is late, your coverage won’t lapse. However, you might be charged a late fee. If you fail to make your payment within the grace period, your coverage might be suspended. This could mean real trouble if a medical emergency occurs.3

How long is the Grace Period for student loans?

Grace periods differ for student loans too. The grace period refers to the time that you are not required to make payments. Students are usually given a grace period while they’re in school and for about six months after they graduate. Be aware, however, that unlike credit card grace periods, interest will still build up during this time.4

How can you extend the student loan Grace Period?

If you’re unable to pay due to unemployment or other reasons, you can apply for a deferment. Another way to gain an additional grace period is by going back to school. Of course, it wouldn’t be sensible to go back to school just to defer paying your student loans. (Interest will continue to accumulate and you’re likely to have to take out additional loans to pay for your continuing education.) You should only consider these options if they’re absolutely necessary.5

Bottom Line.

There is a lot of variety when it comes to grace periods. In the end, it’s up to you to find out whether any given payment has a grace period associated with it and whether you’ll face consequences for making your payment during that period. When in doubt, it’s always a good idea to make your payments by the due date if possible. That way, you won’t have to worry about the specific ins and outs of any given grace period.


1 “Grace Period.” Investopedia, Accessed March 7, 2017.

2 “What is a Grace Period? How Does It Work?” Consumer Finance Protection Bureau, Accessed March 7, 2017.

3 Delbridge, Emily. “What is a Car Insurance Grace Period?” The Balance, Accessed March 7, 2017.

4 Anderson, Tom. “Student Loan Grace Period is Not Always What it Seems to Be.” CNBC, Accessed March 7, 2017.

5 Smith, Kalen. “How to Defer Your Student Loans – 5 Options to Extend or Postpone Paying Back School Loans.” Money Crashers, Accessed March 7, 2017.