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A grace period is a time past the deadline for an obligation during which a late penalty that would have been imposed is waived. Grace periods, which can range from a number of minutes to a number of days or longer, depending on the context, can apply in various situations, including arrival at a job, paying a bill, for meeting a government or legal requirement, or in many other situations.
Types of grace periods 
Some companies and organizations do not view one who fulfills an obligation within a grace period any differently. In these situations, a subject who is past due, but who meets the obligation within the grace period receives equal treatment and no penalty or negative reputation.
Other 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 period 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.
Advantages and disadvantages 
Grace periods can provide some advantages. For example, people who habitually are on time for their obligations, but due to occasional unforeseen circumstances are late on a rare occasion, can avoid a penalty for being late within the grace period and maintain their reputation for timeliness.
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.
Credit cards 
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.
See also 
- http://home3.americanexpress.com/corp/consumerinfo/grace.asp An extensive tutorial on the types of Grace Period and their implementation
- http://www.usatoday.com/money/perfi/columnist/block/2005-05-23-student-loans_x.htm A USA Today article discussing the pros and cons of Grace Period
- http://partners.leadfusion.com/leadfusion/aol/home02/gloss.fcs?glossKey=GracePeriod Grace Periods in the context of Credit