What is a grace period?

If you've paid a bill, you've dealt with a grace period, but you might not actually know what that means.

As the name implies, a grace period is the period in which a lender or other company allows you time to pay your bill. Basically, if you get your bill on March 1, and it says the money is due on March 31, your grace period is 30 days (and they don't often get much longer than that). This should give you adequate time to prepare for a payment.

But if you have to go beyond that grace period for some reason, that's likely to lead to penalties. Whether that's added fees or higher interest rates, you're likely to pay a lot if you miss your deadline by even a single day. Therefore, you're going to need to plan your finances together so that you can avoid those extra costs every month, or else they could add up quickly.