Grace periods and when interest starts
The short answer
A grace period is the window between the statement closing and the payment due date. Pay the statement balance in full inside that window and no interest is charged on purchases. Carry part of it, and interest begins accruing from the transaction date on new purchases.
The national average rate makes the stakes clear. In the Federal Reserve's most recent reading, the average APR on credit card accounts that assessed interest was 22.36%, against 21.19% across all accounts.1 The gap between those two figures is the population that carries a balance.
What ends the grace period
The grace period is not a right attached to every card. It applies while the account is paid in full each cycle. Once any balance is carried, the grace period on new purchases typically stops until the account is cleared again.
Statement balance versus current balance
This distinction decides whether interest is charged. The statement balance is what the issuer reported at closing. The current balance may be higher because of spending since then, and paying only that figure — or only the minimum — leaves part of the statement balance revolving.
| Period | All accounts | Accounts assessed interest |
|---|---|---|
| 2025 Q1 | 21.00% | 21.52% |
| 2025 Q3 | 21.39% | 22.83% |
| 2026 Q1 | 21.00% | 21.52% |
| 2026 Q2 | 20.94% | 22.15% |
| 2026 Q3 | 21.19% | 22.36% |
Minimum payments do not stop interest
Paying the minimum keeps the account current and does nothing else. At a rate near the national average, a balance paid at the minimum can grow rather than shrink, because the finance charge reassessed each cycle can exceed the amount paid.
Paying in full before the statement closes also lowers the balance the issuer reports to the credit bureaus, which reduces measured utilisation.
Cash advances have no grace period
Money withdrawn against a card usually carries a higher rate than purchases and starts charging from the moment it is taken. There is no window in which a cash advance is free, whatever the purchase terms say.
Where the rules differ
Disclosure timing and fee limits sit partly in federal consumer protection rules and partly in state law, so what must appear on a statement, and when, can differ by state. The national averages above describe the market, not any individual account.
1. Federal Reserve Board, Consumer Credit (G.19), release dated 7 October 2026. Average APR across all credit card accounts and on accounts assessed interest, 2025 Q1 – 2026 Q3. Checked 31 October 2026.
Figures are national averages published by the Federal Reserve and change with every monthly release. The date above is the release used for this page.