It’s mind boggling how complicated they make these credit cards. Let me go through how you can keep your grace period and how to get it back if you loose it.
How’s it goin everybody this is me the bush did you know that if you carry a balance on your credit card you no longer just a benefit of having a grace period a grace period is where in your credit card if you spend something on your credit card you actually pay no interest however if you purposely keep a balance on your credit card as some people do thinking that
It will improve their credit score well you no longer get the grace period and every time you spend something you actually have to pay interest on it starting from the day that you actually pay let me explain a little bit about grace periods and how you can effectively use the grace period so that you don’t pay any interest how you can actually lose the grace
Period and end up having to pay interest all the time and once you do that how you can actually get your grace periods back here’s your billing cycle this is month one month two months three these are billing cycles so not necessarily like the first of the month is here and the 31st is here it’s your billing cycle whichever that ends up to be when you first get
Your credit card you can actually spend anything you want on that credit card up to the limit of that credit card and as you’re spending it throughout this billing cycle you actually don’t have to pay any interest as you’re buying stuff so once this billing cycle closes you’ll have a great period of about 21 to 28 days before that amount for this billing cycle is
Actually due says so over here if you pay the full balance before the due date all the time you’re actually going to keep on getting this grace period so the next month over here whatever you buy you’re not going to have to pay interest on whatever you buy immediately and so forth and so on and that’s the way i use my credit card i always pay the full balance every
Single time on the due date and that’s also how i get really high credit score and that’s about eight hundred thirty five right now last i checked for one reason or another maybe bankers telling people to keep a balance on their credit card for some reason maybe so they would pay interest into it so they would our money of course but really when you do that you’re
Actually just paying the bank all the time let’s say on month one you spent $1,000 and on the due day you paid 999 dollars which i think some people actually do because they want to keep a small amount in there for some weird reason so that there actually have a small balance in their account some people think having a small balance actually helps your credit score
Which is completely false you should not do that because that essentially knows out your grace period and you’ll never have a grace period really because every single time you buy something you immediately have to start paying interest so once you pay 999 dollars here being retro actively go back here and if you bought something here you have to pay interest on it
All the way throughout this month too and all the way throughout this time until you pay it all off so let’s say at the beginning of month two you actually spent $1,000 in the beginning now let’s estimate maybe your credit apr and 12% so that every one thousand dollars every single month is a hundred dollars of interest roughly and over here in month one new day
You pay nine hundred $99 so they went back and then go okay just kidding you don’t have a grace period anymore for these immediate purchases so we’re going to calculate interest for that $1,000 so as this billing boundaries are going to go oh you owe $1,000 plus the interest and it’s due somewhere over here about 21 to 28 days later when you don’t pay your full
Balance by the due date you kick into this thing where you no longer have a grace period and any purchase that you make immediately accrues interest which is really really bad because the interest on credit cards it’s not 12% it’s certainly like 18 20 to 25% which eats a lot into your budget so don’t can all out your grace period by paying a partial monthly if you
Can pay the full balance it’s kind of hard to get back your grace period it may take about two months of paying your balance in full before you can get your grace period back and some credit card policies actually requires you to pay in full for two months before they would give you back your grace period so let’s say you’re a little bit weighs in here and you’re
About to pay by this due date okay you’re being responsible to you said you see the statement it says $1,100 so you go okay i’m going to write check and you’re going to pay it before right before this dude a completely legal okay you’re not going to get any charges and you know your credit report will stay looking good but then once you reach over here if you spent
Anything in months three you still do not have that grace period which means anything that you spent in months three you also have some sort of finance charge and interest charge charge on top of that when you go about trying to get back your grace page you actually have to pay the current balance and any potential interest that may not appear until the end of the
Billing cycle so the best way to get back your grace period really quickly is to go into your account and look at the full balance do okay not the statement balance you need to look at the full balance don’t use your card for a little while just to listen things settle a little bit and then you got to watch at the end of the statement period right when they give
You the statement they’re going to charge you the interest for the stuff you did in that month then you also have to pay that right away and possibly then you might be able to get back your grace period on the next month this scheme kind of reminds me of student loans and mortgages because if you were about to pay off either of those they usually have a calculator
Where it goes okay if you’re going to completely pay it off in three days let’s say which is maybe the time it takes you for to mail in the check it takes three days then they’ll go okay in three days you would owe this amount so you need to write a check for a little bit more so that you don’t get gold end up in this cycle where you pay it off okay and then they
Don’t charge you to interest it until later and then later on you find you think that you paid it fully off but then a little bit of interest amount pops up and then you go okay let me pay that $10 off and on and on it goes and if you don’t pay what’s going to be due including the interest that is not shown then you’re going to end up going in this cycle for quite
A few times before you can get your grace period back so i hope this helps a lot of people not carry a balance just to improve their credit score comment down below let me know if you actually did this where you keep a balance just to improve your credit score if you’re interested in supporting me in this channel you can go in the video description down below and
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Transcribed from video
How Credit Card Grace Periods Work | BeatTheBush By BeatTheBush