DISCUSS A DAY OF GRACE

        A grace period is a period of time in which someone is late with a payment, but penalties are not
incurred. There are a number of different types of grace periods, but the important thing for consumers
to be aware of is that, as a general rule, as long as a payment is made during the grace period, they will
not be treated differently from people who pay when the bill is due.

        One example of the grace period is the period between the time a credit card statement is
issued and the balance or minimum payment is due. During this period, interest will not accrue on new
purchases, and the card holder can choose to pay the bill in full and avoid all interest fees. This grace
period is usually between 21 and 25 days, depending on the credit card company.

        Insurance companies often have a two week grace period which ensures that people remain
covered even if their payments are late. If a car insurance premium is due on the first of the month, for
example, the car insurance will continue to be effective until the 15th, even if the premium is not paid.
After this point, nonpayment of the premium causes the policy to lapse.

        Grace periods can also be built into bills. Rent, for example, often has a five day grace period
after the due date during which received payments will not be considered late. Utilities also have a
grace period between the time the bill is issued and the date that the bill will be payable. An electricity
bill might be issued on the 12th, for instance, but as long as the account holder pays by the 28th, no
penalties will be incurred.

        Student loans classically have a grace period after graduation during which no payments are
due. Students can choose to start making payments during this period, in which case the lender may
carryover the unused months for future use. Holding on to the grace period for a time of need is a good
financial move for students, as it ensures that they will have some wiggle room in the event of a
financial problem.

        During a grace period, interest fees, late fees, and other penalties will not be charged, but as
soon as the period ends, the fees can start to rack up. For this reason, it is a good idea to pay bills in a
timely fashion, to avoid being penalized. If a bill is due on the 15th, for example, the check shouldn't be
mailed on the 14th, because this does not allow enough time for the payment to be processed.


Alexander, G Caleb

Dean, Andrés

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