Monday, December 18, 2006

A Lesson on Grace Periods

The other day I was at work, at my desk, when I suddenly heard my boss expressing her opinion about one of her credit card companies. They had decided to raise her interest rate since she made a few late payments. She was furious. "How can they raise my rate? There's a 15 day grace period" she uttered. I then asked her, "what do you think grace period is?" She said that grace period was the amount of days late after the due that one could submit a payment without being charged penalties. I tried to explain to her but she just wouldn't hear me.

Hear me now! Grace period isn't the amount of time after a payment is due that you can make the payment. If a payment is due on the 5th, you better make sure that the credit card company receives it on the 5th, and no later. If they receive it later, they have every right to increase your interest rate, charge you a hefty fee, or do what ever else the contract you signed states.

Grace period is number of days between when a credit card bill is sent and when the payment is due without incurring interest charges. Most banks offer credit card holders a 25-day grace period, though some offer more and others fewer days.

My boss isn't the only one who had the definition of grace period mixed up. I asked my mother a few days later if she knew what grace period meant and she told me the exact same thing that my boss said.

When you think of the word grace, you automatically think of exemption, immunity, or forgiveness. Those are all correct, but, you aren't exempt from making your payment on time. You are exempt from accruing interest. Paying a credit card late is the worst thing that you can do when it comes to managing credit card. It only leaves you with a sour taste in your mouth. So next time, make sure you send those payments in on time, before your grace period is over.

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