What is a grace period?
Grace periods on accounts with CarMax Auto Finance vary based on applicable law, which depends on where you purchased your vehicle and signed your retail installment contract. A grace period is the time after the payment is due and before a late charge is assessed. We recommend that you mail your payment 7-10 days in advance to allow for timely receipt. Despite grace periods, your monthly payment is due by the due date. All payments received after that date are considered late, even when a late charge is not assessed.
The grace period is a period of time following the close of the billing cycle in which no interest is charged. The grace period of most credit cards normally applies only to billing cycles where the opening balance is $0. That is, you must pay off your credit card balance in full the previous month in order to be eligible for the grace period. For example, if you used a credit card with no grace period and 15% APR to make a $1,000 purchase on the first day of the billing cycle, and paid off the balance completely 40 days later, you would pay about $15 in interest. However, if your card had a twenty grace period, you would pay no interest because you paid off the balance before the grace period expired. The grace period in effect provides you with an interest free loan for about one month. In a related article, we explain how you can take advantage of your cards grace period to earn interest income.
A grace period is the time you have before a credit card company starts charging you interest on your new purchases — usually a period of 20 to 25 days. But this “free ride” on finance charges does not work the same way on all credit cards. In fact, on most credit cards, you will be charged interest on your new purchases immediately — unless you have paid off your credit card in full the previous month. How Do Grace Periods Differ? A card with a typical grace period… • Has an average daily balance including new purchases as the balance calculation method. This means you pay interest on all new purchases immediately, unless you have paid your previous month’s bill in full. A card with a full grace period… • Has an average daily balance excluding new purchases as the balance calculation method. New purchases are not included in figuring the amount of interest you owe for the current month. Unlike the typical grace period described above, you get the benefit of the grace period, whe
