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Grace period

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Grace period

A grace period is a period immediately after the deadline for an obligation during which a late fee, or other action that would have been taken as a result of failing to meet the deadline, is waived provided that the obligation is satisfied during the grace period. Grace periods can range from a number of minutes to a number of days or longer, depending on the context, and can apply in various situations, including arrival at a job, paying a bill, or meeting a government or legal requirement.

In law, a grace period is a time period during which a particular rule exceptionally does not apply, or only partially applies. For the grace period in patent law, see novelty (patent).

Contents

  • Types of grace periods 1
  • Advantages and disadvantages 2
  • Credit cards 3
  • See also 4
  • References 5

Types of grace periods

Some companies and organizations do not view someone who fulfills an obligation within a grace period any differently from someone who does so before the original deadline. Thus a subject who is past due, but who meets the obligation within the grace period, receives equal treatment and no penalty or negative reputation.

In other cases, clients may receive a partial, less severe penalty. For example, many utility companies will charge a small late fee for those who do not pay their bill by the stated due date. However, the utility service provider will wait a longer time before cutting off service.

Some companies may suspend certain privileges during a grace period. For example, self storage services will often waive a late fee if the rent is not paid for up to several days past the due date, but will deny the tenant access to his/her unit until the bill is paid.[1]

Advantages and disadvantages

Grace periods can provide some advantages. For example, people who habitually fulfil their obligations on time, but are late on a rare occasion due to special circumstances, can avoid a penalty and maintain their reputation for timeliness provided they fulfil the obligation within the grace period.

However, habitual procrastinators may come to view the grace period as the actual deadline, and if, due to unforeseen circumstances, they are occasionally late beyond that, they might complain about the applied penalty.[2]

Credit cards

In personal finance, a grace period is the period during which no interest is charged on a credit card. See Credit card interest for further information.

A time period after a payment due date within which the fee can be paid without penalty. For example, late charges may not be incurred for rental payments due on the first of the month if they are paid on or before the 10th of the month.[3]

See also

References

  1. ^ "An extensive tutorial on the types of Grace Period and their implementation". American Express. Archived from the original on 6 March 2007. 
  2. ^ "A USA Today article discussing the pros and cons of Grace Period". Usatoday.com. 2005-05-24. Retrieved 2013-07-16. 
  3. ^ "Grace Periods in the context of Credit". Partners.leadfusion.com. Retrieved 2013-07-16. 


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