By Ben LuthiWhat Happens When You Lose Your Credit Card Grace Period?
By Ben Luthi
Quick Answer
If you've lost the grace period on your credit card, interest will start accruing on your purchases immediately. Paying off your balance and making on-time payments going forward are crucial to restoring your grace period.
Most credit cards offer a grace period on purchases, allowing you to pay off your balance each month with no interest charges. However, it's possible to lose your grace period, and if that happens, interest will start accruing on your new purchases from the date of the transaction.
If you want to understand how to avoid losing your grace period or how to get it back after you've lost it, here's everything you need to know.
What Is a Credit Card Grace Period?
A grace period on a credit card is a period of time between the end of your monthly statement cycle and your due date. During this time, which can be 21 days or more, you can avoid interest charges on your purchases from the previous billing cycle if you pay off your balance in full.
Note that grace periods don't apply to other types of credit card transactions, such as balance transfers and cash advances.
How Do You Lose Your Grace Period?
There are a few different ways you can lose the grace period on your credit card, including:
- Not paying your statement balance in full: If you carry a balance from one month to the next, your card issuer will charge you interest on the unpaid balance, as well as on new purchases starting on the date of the transaction.
- Missing a payment: If you miss a payment by just one day, your card issuer will charge interest on the unpaid balance plus a late fee, if applicable. Additionally, interest will start accruing on any new purchases you make from the date of the transaction. Remember that if your payment is late by 30 days or more, it can also harm your credit.
- Getting a card with a balance transfer promotion: Many credit cards offer an intro 0% APR promotion on purchases, balance transfers or both. If the card only offers a 0% APR on balance transfers, though, and you transfer a balance from another card, new purchases you make during the promotional period will accrue interest from the date of the transaction as long as you have an outstanding balance from your transfer.
How Can You Restore Your Credit Card Grace Period?
Fortunately, the process of getting back your grace period is straightforward. If you've lost it due to a missed or partial payment, simply start paying your balance on time and in full.
If you don't have a grace period due to a 0% APR balance transfer promotion that doesn't extend to purchases, consider using a different credit card to make purchases until you've paid off your balance transfer.
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How to Pay Down Your Credit Card Balance Fast
Depending on your situation, you may or may not be able to pay off your credit card balance and restore your grace period quickly. As you consider your circumstances and options, here are some potential steps you can take:
- Cut discretionary spending. If there are areas of your budget where you can temporarily cut back, you can reallocate that cash flow toward your credit card balance.
- Sell unused items. Check your home for items you no longer need or use and consider selling them through an online local marketplace.
- Take a temporary job. If your credit card balance is relatively large, you may consider taking on a temporary job and putting that income toward your credit card payments. Alternatively, you could check for opportunities for overtime hours at your primary job.
- Avoid using your cards. If you continue to use your credit card for new purchases, you'll not only accrue more interest, but it'll also make it harder for you to achieve your goal. Consider using a different credit card or stop using credit cards altogether until your debt situation is under control.
Monitor Your Credit as You Pay Down Credit Card Debt
Racking up a large balance is not only expensive, but it can also hurt your credit score. As a result, it's important to prioritize paying your balance in full each month. As you develop and execute your credit card payment strategy, it's important to understand how your actions are impacting your credit.
With Experian's free credit monitoring service, you can access your FICO® ScoreΘ and Experian credit report for free, making it easy to track your progress and spot other potential issues in your credit file. You'll also get real-time alerts when changes are made to your credit report, so you can address problems as they arise.
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About the author
Ben Luthi
Ben Luthi has worked in financial planning, banking and auto finance, and writes about all aspects of money. His work has appeared in Time, Success, USA Today, Credit Karma, NerdWallet, Wirecutter and more.
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