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No Grace Period or Float For You!

 NO GRACE PERIOD OR FLOAT FOR YOU

That is right you do not get a grace period or float on your purchases if you did not pay off your credit card last month.


What is Float?

If you have a zero balance on your credit card and you charge an item, Float is the time period after you charge the item until your statement prints.  Actually your payment becomes due on the statement date.  


What is a Grace Period?

 After the statement prints you have at least 21 days (federal consumer protection laws) until the payment is past due this is your grace period.  The 21 days is your interest free grace period.  If you pay within the grace period you will not be charged interest as long as you paid your card in full last month and pay it in full this month. 


If you do not pay within the grace period interest will be calculated from the statement date which is 21 days earlier!


Who gets the Grace Period?

If you paid off your credit card last month you will not be charged interest until 21 days after statement date as long as you pay before the due date.  However if you do not pay within the grace period they will back charge you interest to the statement date.


If You Did Not Pay Off Your Card Last Month

You will be charged interest on the unpaid balance and interest on Everything You Charge on your card this month.  You do not get Float or a Grace Period on your purchases this month if you did not pay off your card last month.

Cash Advances or Credit Card Account Checks

Cash Advance Checks do not get Float or a Grace period.  If you take a cash advance on your Credit Card, interest will start being calculated the day the cash advance is processed.  You will not get the float or the grace period on the cash advance and some card issuers will not give you float or a grace period on other charges you make after the cash advance.


The lost Float and Grace Period of Free money can add up.   Interest on unpaid credit card bills adds up very quickly. What starts as a partially paid credit card bill of $200 can quickly grow to a couple of thousand dollars. Always pay your credit card in full to get your free Grace Period and Float.


Listen to one or two Dave Ramsey programs and you will hear people calling in who started with an unpaid credit card of $200 and have run the balance up to the thousands.


The Credit Card Trap

Let's say you take home after taxes $3000 per month. You buy tires and wheels for your car for $1500 and buy them with your credit card. Your plan is to pay them off over the next six months. You figure that is only $250 a month.


Your minimum payment with $1500 balance on some cards will be $37.50. $15 in principal and 22.50 in interest.


The first month you make the extra $250 payment but then vacation comes along and you overspend.


This is where you start to get into trouble. Your balance climbs to $2500 and before you know it you owe your credit card more than you take home per month.


It is really hard to get caught up when you get just one month behind. The interest kicks in much harder and you are stuck in the Credit Card trap.


Thousands of Americans are caught in this Minimum Payment Credit Card trap.
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