The difference between God's mercy and His grace

God has often forgiven sinners, but He never forgives sin; and the sinner is only forgiven on the ground of Another having born his punishment: for "without shedding of blood is no remission" (Heb 9:22). - AW Pink "The Attributes of God"  pg31

What is grace? 
According to AW Pink - Divine grace is the sovereign and saving favor of God exercised in the bestowment of blessing upon those who have no merit in them and for which no compensation is demanded from them.  Nay, more; it is the favor of God shown to those who not only have no positive deserts of their own, but who are thoroughly ill-deserving and hell-deserving. - pg 50
This grace is free and unmerited.  There is nothing that man can do to receive it.  If there was, then it would not be grace. 
Romans 11:6  But if it is by grace, it is no longer on the basis of works; otherwise grace would no longer be grace.
Titus 3:5 He saved us not because of works done by us in righteousness, but according to His own mercy, by the washing of regeneration and renewal of the Holy Spirit,


When talking about God's mercy, AW Pink says that we need to keep in mind 3 distinctions when it comes to God's mercy.
First is the general mercy of God.  This is the mercy that is extended to all creation.  Psalm 145:9 The LORD is good to all,and his mercy is over all that he has made.

Secondly is God's special mercy, that is just toward mankind.  God provides all the "necessities of life" for us.   Matthew 5:45 For he makes his sun rise on the evil and on the good, and sends rain on the just and on the unjust.  This mercy is limited, and it ends when the life of the man ends. Isaiah 27:11

And lastly there is God's sovereign mercy, and you guessed it, this mercy is only for the children (the elect) of God.  God only provides this mercy through the finished work of His Son Jesus Christ, which is applied through the work of the Holy Spirit.  This mercy continues for all eternity.

Now some will say that this not fair.  Doesn't Psalm 136:1 say that, "His mercy endures forever"?  This is true, but God has control over the exercise, or the application, of this mercy.  God always has the choice to extend whatever mercy that He wants to whomever He wants. 
Romans 9:15 For he says to Moses, "I will have mercy on whom I have mercy, and I will have compassion on whom I have compassion."

Luke 18:9-14  The Pharisee and the Tax Collector

9 He also told this parable to some who trusted in themselves that they were righteous, and treated others with contempt: 10 "Two men went up into the temple to pray, one a Pharisee and the other a tax collector. 11The Pharisee, standing by himself, prayed thus: 'God, I thank you that I am not like other men, extortioners, unjust, adulterers, or even like this tax collector. 12 I fast twice a week; I give tithes of all that I get.' 13 But the tax collector, standing far off, would not even lift up his eyes to heaven, but beat his breast, saying, 'God, be merciful to me, a sinner!' 14 I tell you, this man went down to his house justified, rather than the other. For everyone who exalts himself will be humbled, but the one who humbles himself will be exalted."

All of us should pray for "tax collector" hearts.  Broken over our sin and grateful to God for the forgiveness that is found in Christ.
I am grateful that AW Pink took the time in his book "The Attributes of God" to share with me the difference between God's grace and His mercy.  It helps me to love and appreciate Him more. 
Soli Deo gloria