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Everyday Cheapskate: What Is a Grace Period, and How Does It Work?

Mary Hunt on

These days, only an excellent credit score -- generally above 740 -- will get those advertised rates. If you have a lower score, your application will be rejected or you'll be offered a card with a higher interest rate. It's in the fine print.

Dear Mary: Are credit card companies allowed to send you to collection, even though you've been making monthly payments, just not meeting the payment required? -- Ben

Dear Ben: They sure can. If you do not abide by the terms and conditions of your contract with the company, you are in default.

While a credit card company is required by law to accept any amount of money at any time and apply it to the customer's account, if the amount received by the due date is less than required by the terms of the agreement, they'll slap you with a late fee. And if that late fee pushes your outstanding balance over the credit limit, they'll slap on an over-limit fee, too.

If the account remains in default, they can and probably will send it to collection.


Here's something else to consider: As long as you are in default, they will continue to report you to the credit bureaus as late. Continual "past-due" entries will wreak havoc on your credit score.

Assuming you're asking this for yourself and your account has gone to collection -- and even though you didn't ask my advice, here it is -- call the issuer directly right now. Find out the status of your account and how you can bring it current to get it out of collection. If it's possible, you're going to need to come up with enough money to do that. It might mean selling assets, working extra hours or even getting a side job for nights and weekends. As rough as that might be for a season, it will be worth the effort. Good luck!


Mary invites you to visit her at, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at, "Ask Mary." Tips can be submitted at This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of, a frugal living blog, and the author of the book "Debt-Proof Living."

Copyright 2021 Creators Syndicate Inc.



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