Avoid Credit Card Interest Using the Grace Period
Summary
Paying interest on your credit card? You might not have to. In this episode of Credit Diaries, Possible’s Chief Credit Officer Ellen Falbo explains how to use your credit card without paying a dime in interest—just by understanding your statement balance and the grace period.
A grace period is the window between when you make a purchase and when interest starts building on that purchase. If you pay your statement balance—not your entire balance—by the due date each month, you can avoid interest entirely. That’s money you get to use, interest-free.
You’ll also hear from James, a Possible customer who shares his personal strategy for staying out of credit card debt. He keeps his usage under 30% of his credit limit and only spends what he already has in his bank account. It’s a simple approach that’s helping him build better financial habits.
This video breaks down what your credit card balance really means, how statement balances work, and why paying more than the minimum matters—even if you can’t pay in full. Whether you're rebuilding your credit or just want to stop paying unnecessary fees, this is one strategy worth knowing.
Learn how to take control of your credit card and avoid debt by using it smarter.
Transcript
[ELLEN]
"That's interest-free money for you."
[JAMES: Possible customer]
"I've been in credit card debt before, but now… I'm avoiding it by limiting my usage on credit cards. I don't allow myself to use any more than 25 to 30% of my limit and only really for purchases that I have the money for as well.
So that way I can pay right off.
So that's my new thing."
[ELLEN]
"A lot of people will tell you, pay your credit card in full every month. That is absolutely the best.
But if you can't do that, paying more than the minimum and paying as much as you can afford every month can also create a really good path out of debt."
[ELLEN]
"If you pay the minimum balance on your credit card every month, it's going to keep your account in good standing, which is a plus for your credit score, but it's going to be very expensive."
[ELLEN]
"There’s another concept with credit cards called a grace period… If you pay your credit card in full every month, you will typically not pay any interest… even though it may take a month between when you made the purchase and when you pay back that credit card."
[ELLEN]
"That’s interest-free money for you—as long as you pay that balance in full every month. Credit cards give you this grace period of time between when you make a purchase and when it starts accruing."
[ELLEN]
"That doesn't actually mean there's zero balance on your credit card because you may have made purchases after your statement."
[ELLEN] "If you pay that statement balance before the due date, then you've paid off your credit card."
