Meenal is a credit card user and she is handling a credit card for the first time. She makes a purchase of Rs. 10,000 from her credit card. By the end of the billing cycle, she pays the balance amount within the due date clearing all her balance. Therefore, she will not be charged interest on her purchases in the next month or the next billing cycle. This is how the grace period works and how to use it wisely.
On the other hand, Gautam is also a credit card user who has been handling a credit card for the first time. He also makes a purchase of Rs. 10,000 from his credit card but fails to pay Rs. 2,000 before or by the due date. Then, the unpaid amount would start accruing interest charges from the beginning of the billing cycle. Hence, the purchases made in the second billing cycle would also be hit by interest charges that Gautam is bound to pay.
Although the interest charges may not be huge, if this continues to happen every month or billing cycle then it will cost Gautam a huge amount of money that he could have saved if paid the balance on time.