grace period

grace period   n.   A period in which a debt may be paid without accruing further interest or penalty. A period in which an insurance policy is effective even though the premium is past due.

grace period

The period during which the issuer of a bond is not required to make interest payments. For example, a bond issued this year might only start paying interest five years from now. Bonds with grace periods are sometimes issued during a corporate restructuring.

Main Entry: grace pe·ri·od
Function: noun
: a period of time beyond a scheduled date during which a required action (as payment of an obligation) may be taken without incurring the ordinarily resulting adverse consequences (as penalty or cancellation): as a : a period of 30 days or one month during which premiums on insurance policies may be paid without penalty b : a period of ten days during which certain security interests (as those in fixtures or purchase money security interests) must be perfected in order to have priority over conflicting security interests under Article 9 of the Uniform Commercial Code called also days of grace