Grace Period

In finance, the term grace period refers to a period of time during which a borrower can delay repayment of debt without any consequences.

For example, a secured loan may have a grace period during which the collateral will not be seized if a payment is not made on time.

Revolving credit instruments may have a grace period during which the borrower is not required to pay interest.

The term is widely used in relation to credit cards. The grace period of a credit card is the period after the end of the billing cycle (when you receive your bill) during which the credit card holder is not charged interest. If a credit card bill is not paid by the end of the grace period, interest is charged retroactively from the end of the billing cycle.

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