A grace period is the stretch of time between the end of a billing cycle and the payment due date during which new purchases don't accrue interest — provided you pay your statement balance in full. It is a feature most issuers choose to offer, not something federal law requires.
Where you'll see it
In your cardholder agreement, usually under a heading like "How to Avoid Paying Interest on Purchases," and on the statement itself near the payment due date. The agreement is also where the conditions for losing it are spelled out.
The rule behind it
Credit card companies are not required to give a grace period. However, most credit cards provide a grace period on purchases.
If you lose your grace period by not paying your balance in full by the due date, you will be charged interest on the unpaid portion of the balance. You will also be charged interest on purchases in the new billing cycle starting on the date each purchase is made.
However, if a cardholder pays less than their full balance by the payment due date or takes a cash advance or balance transfer, they typically forfeit grace period status, at which point the card account will be in revolving status, where unpaid balance amounts may be subject to interest charges.
The detail most people miss: losing the grace period doesn't only affect the balance you carried. New purchases in the next cycle start accruing interest from the date of each purchase, not from the next due date.
Consumer info, not financial advice.