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Delinquency

What Is a Grace Period?

A grace period is a set amount of time during which you're either not accruing interest on credit card debt or not being penalized for a late payment on a mortgage loan. Depending on the creditor and the type of debt, grace periods can last anywhere from a few days to a few weeks and can be a handy way to avoid late fees and high interest payments.

What Is a Typical Grace Period for a Mortgage?

A grace period for a mortgage varies from lender to lender, but typically lasts around 15 days from your payment due date. That means if your mortgage payment is due on the first of every month, you'd have until the 16th of the month to make your payment without penalty.

As long as you make you payment within the grace period outlined by your lender, your creditor won't be able to charge you any late fees. Late payment fees on mortgages can range from 3% to 6% of the monthly payment amount, depending on the local laws and lender.

Since grace periods vary depending on the lender, make sure to check your mortgage documents to find out how many days you have before you're hit with a late payment penalty.

What Is a Typical Grace Period for a Credit Card?

For credit cards, grace periods are defined slightly differently. Credit card grace periods don't protect you from late fees like with mortgages, but rather they give you time to pay your balance in full without being charged interest on your purchases. Typically, the grace period on your credit card is the time between the end of your billing cycle and the day your payment is due.

While credit card companies are not legally required to give you a grace period, many issuers do. Grace periods for credit cards will vary depending on the card issuer, but federal law requires that credit card companies send you your bill within 21 days of the payment due date, which means that you'll have at least 21 days' notice of how much you owe for that billing period.

Do Payments Made Within the Grace Period Affect Your Credit?

In most cases, payments made during the grace period will not affect your credit. Late payments—which can negatively impact your credit— can only be reported to credit bureaus once they are 30 or more days past due. If you don't submit a payment during the grace period, you'll be responsible for paying any interest or late fees that are added to your account.

If you do not pay your bill within 30 days of the due date, the creditor—in addition to charging you any late fees or interest—will have the right to report the missing payment to one or more of the three major credit bureaus (Experian, TransUnion and Equifax). Payment history is the most important aspect of your credit score, and even one late or missed payment can negatively impact your scores.

If you've missed a payment in the past and are unsure if its listed in your credit report, consider getting a free copy of your credit reports and credit scores from Experian to see if any negative marks appear on your credit report.

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