period of time provided in most loan contracts and insurance policies during which default or cancellation will not occur even though payment is due.
Credit cards: number of days between when a credit card bill is sent and when the payment is due without incurring interest charges. Most banks offer credit card holders a 25-day grace period, though some offer more and others fewer days.
Insurance: number of days, typically 30, during which insurance coverage is in force and premiums have not been paid.
Loans: provision in some long-term loans, particularly eurocurrency syndication loans to foreign governments and multinational firms by groups of banks, whereby repayment of principal does not begin until some point well into the lifetime of the loan. The grace period, which can be as long as five years for international transactions for corporations, is an important point of negotiation between a borrower and a lender; borrowers sometimes will accept a higher interest rate to obtain a longer grace period.

1. time period allowed for making payments on a loan. Payments made after the due date, but within this 10-15 day period are considered timely payments, and not subject to late charges or other penalties.
2. in credit cards, the time period, ranging anywhere from 10 to 25 days, in which interest is not charged on current purchases. Also called free period. Some credit card issuers, though, allow a grace period only on paid-up accounts with no balances carried overfrom the previous month.
3. in international banking, the length of time during which the borrower is excused from making loan principal payments. For example, multilateral soft loans to developing countries are long-term loans arranged through the World Bank, with lenient credit terms and grace periods that are measured in years.

period of time provided in most loan contracts and insurance policies during which default or cancellation will not occur even though payment is past due.

period after the date the premium is due during which the premium can be paid with no interest charged, the policy remaining in force. This period is for 30 or 31 days. If the insured dies during this period, the beneficiary would receive the full face amount of the policy minus the premium owed. Thus the use of the grace period allows the financial technique of leveraging.

the period during which one party may fail to perform without being considered in default .

Example: Rent is due on the first of each month, but the tenant requested and received a 10-day grace period from the landlord. If rent is paid on or before the 10th, the tenant is not in default.