- Even before the CARD Act credit card companies moved to end grace periods. The CARD Act accelerated this process, because it increase the regulator requirements for issuers that use grace periods, such as requiring the company to send bills at least 21 days in advance. Eliminating grace periods increases the card company's bottom line. Instead of allow customers an interest free loan until the grace period ends -- most companies that offer grace periods do so for at least a few weeks -- the creditor can charge interest the moment the borrower makes a purchase.
- When the credit card company offers a grace period, the CARD requires it to be at least 21 days after the mailing date of the bill. This means that companies that had shorter grace periods before the CARD Act have the choice of either making bill payable immediately or giving almost a month to pay it off.
- As of April 2011, it has only been a year since the CARD Act changes, so it is too soon to say whether grace periods will become rare in the credit card industry. As long as an issuer offers a card with a grace period, consumers should almost always go with an account that gives a grace period if they can qualify for it. This is especially true for people that never carry a balance from month to month. With a grace period, you can enjoy the benefits of an interest-free short-term loan and usually get some money back, because most credit cards return 1 percent to 3 percent of what you buy.
- Go over your credit card agreement before applying for an account. The agreement will state the length of the grace period -- if any. Also, be careful when you receive an offer for a professional credit card in the mail. The CARD Act changes do not apply to professional cards, which are really small business credit cards. This could help you out, because the issuer can offer grace periods shorter than 21 days, but also change rates for missing a payment by as little as a day and other practices the CARD Act stopped for consumer accounts.
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