Whether you're dealing with student loans or your monthly mortgage, you may encounter terminology that's not so easy to understand in your contract. Take, for example, a grace period. A grace period is a common perk that many lenders provide as a buffer.
Simply put, a grace period is a period after your bill due date where you can still make payments without experiencing a penalty. Think of it as late fee protection or a safety net. Lenders don't want you to use the grace period frequently. But it's there to help you avoid potential penalties should you ever need it. What Happens During a Grace Period In most cases, nothing happens during the grace period. Your bill due date comes and goes. You'll likely receive calls or emails to remind you to make a payment. But as long as you're still in that grace period, you won't incur any late fees. You also don't have to worry about a ding on your credit score, penalty interest rate hikes, or other unwanted ramifications. Depending on your contract, the lender might add compound interest during the grace period, but it will not be a sizeable fee. How Long are Grace Periods? The length of a grace period depends entirely on the creditor. The average is around 15 days. However, some companies may only offer as little as five days. Student loan companies also offer a larger grace period before you officially start making payments. It usually begins upon graduation and lasts six months. After six months, interest begins to accrue, and you must start making payments. Do All Lenders Offer Grace Periods? Here's where understanding your contract comes in handy. Not every lender offers a grace period. Some will charge a late fee the day after your due date. Most credit card companies don't offer a grace period. In those cases, you'll need backup late fee protection to avoid penalties. Grace periods can be a lifesaver when you find yourself in financial straits. But read up on your provider's policies to ensure it's something you can use. Read a similar article about automatic bill pay here at this page.
0 Comments
Leave a Reply. |
AuthorEmily Clarke writes about cash advances, overdraft protection & finance apps. ArchivesCategories |