Credit Card Late Fee

A late fee is a fee that is charged to you when your credit card payment is received after the due date of your bill, or you have paid less than the minimum required amount. When you have a balance on your credit card, your billing date will never be less than 21 days after the end of your billing cycle.

The law limits how much a credit card issuer can charge a late fee. Starting January 1, 2020, publishers can charge up to $29 the first time you’re late or up to $40 if you’re late paying more than once in the previous six months. (2019 maximum minus $1.)

As part of the Truth in Lending Act, the Bureau of Consumer Financial Protection evaluates late fees limits annually to ensure they are in line with US inflation.

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In addition, the late fee must not exceed the amount of the violation. For example, if you are late paying a minimum of $10, your late fee cannot be higher than $10.

Most credit cards charge a fee based on how often you let your account overdue. But some credit cards have tiered late fees based on your credit card balance. For example, if your balance is less than $1,000, your late fee might be $10, but if it’s between $1,000 and $2,000, it might be $20, and if it’s more than that, $25.

If you don’t pay late fees before the end of your next billing cycle, your next minimum payment will include the regular minimum payments, late fees, and overdue payments from the previous billing cycle.

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You may also incur late fees for other types of loans and lines of credit. With some products, late fees are not charged until after the payment grace period.

How to Avoid Late Fees

You can avoid late fees by making the full minimum payment by the due date. Sending your payment well in advance is important if you are sending your payment. If you’re forgetful, consider scheduling payments through the credit card issuer’s website or through your bank’s online bill payment system.

You should also pay attention to when your payments are due, especially if you know you will be deducting them. If your payment is made after the deadline, even on the due date, you may still be charged a late fee. Credit card issuers cannot demand that your payment be due before 5 pm, and some even accept payments until midnight. Contact your issuer for the specific deadline on your card.

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As the due date approaches, make payments online or over the phone. Some lenders may charge additional fees for expedited payments, especially if a customer service representative helps process payments. However, that fee may still be less than the late fee.

And if you’re not often late on your credit card or loan payments, be sure to ask if you can waive your late fees. A publisher who can see you have had no problems with past payments may, in fact, give you a (one-off) break.

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