Credit Card Grace Period: Credit cards often come with a 45-day grace period that seems like a free borrowing window. Many users believe that if they pay their balance within this period, they won’t incur any interest. However, experts caution that this grace period can quickly turn into a debt trap.

Credit Card Grace Period:

The 45-day grace period is meant to offer interest-free credit if the total balance is paid in full. However, if you pay even a small part of your balance, interest is charged on the entire amount from the day of the transaction.

The Real Trap

For instance, imagine you spend Rs 60,000 on your credit card on day one. If by the due date, you pay Rs 58,000, leaving Rs 2,000 unpaid, you could be in trouble. The Rs 2,000 shortfall triggers an interest charge on the entire Rs 60,000, at a rate of 36% to 42% annually. This means that your “free” period disappears, and you begin to accumulate high-interest charges.

Why People Don’t Realize the Cost

Many cardholders set up autopay for the minimum due, thinking they are being cautious. But this can lead to unnoticed interest accumulation. Over time, small amounts of unpaid balances can snowball, turning manageable expenses into a massive debt burden.

The Real Problem

While credit cards are useful for building a credit score or handling emergencies, the issue arises when users don’t fully understand how billing cycles and interest work. Experts stress that credit cards are not inherently bad, but the fine print can cause major financial problems if overlooked.

To avoid falling into the debt trap, always pay your total balance by the due date. Even small unpaid balances can result in heavy interestcharges, wiping out the benefits of the grace period.

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