If one actually sits to think about it, a credit card is essentially a loan you get from a bank, and that too interest free with a grace period of anything between 21-25 days. Thus, the duration between the due date and the end of the billing cycle is called as the grace period.

Let’s take a deeper look at how the grace period works:

Let’s say you credit card has billing cycle of January 5 to February 4, with a due date of March 1. Any purchases made within the billing period can be made interest-free until the payment due date. However, if you don’t pay your balance in full on or before March 1, then you’ll owe interest on your average daily balance.