Late Fees on Credit Cards
A late fee is a fee charged when your payment is received after the due date or, with some loans, after the payment grace period. When you have a balance on your credit card, your payment is due at a minimum of 21 days after the end of your billing cycle. If you make a payment after your due date or you make less than the minimum payment, you'll be charged a late fee.
Some credit cards have tiered late fees based on your credit card balance. For example, if your balance is between $0 and $500 your late fee might be $15 or if your balance is over $500 your late fee might be $30. Other credit cards have a fixed late fee regardless of the balance on your credit card.
The Maximum Credit Card Late Fee
By law, credit card issuers are limited to what they can charge for a late fee. Credit card issuers can charge a maximum late fee of $25 the first time you're late or up to $35 if you've been late on your payment within the past six months. The late fee can't exceed the amount of the violation. For example, if you were late on a $10 minimum payment, your late fee can't be higher than $10. Because of this, many credit card issuer have made the minimum payment $25 or more.
Late Fees on Other Accounts
You can also be charged a late fee on loans and lines of credit. If you don't pay the late fee before your next billing cycle ends, your next minimum payment will include the regular minimum payment, the late fee, and any past due payment from the previous billing cycle. Most every type of account with a payment due date charges a late fee if your payment is not made by the due date.
How to Avoid a Late Fee
You can avoid late fees completely by making at least the full minimum payment before the due date. Sending your payment in advance is important, especially if you mail your payments. If you habitually forget to make payment, consider scheduling payments via the credit card issuer's website or through your bank's online bill pay.
You should pay close attention also to the time your payment is due, especially if you're paying on the due date. If your payment is made after the cutoff time, even if it's on the due date, you can still be charged a late fee. Credit card issuers cannot require your payment be due before 5 p.m., and some even accept payments up until midnight. Check with your credit card issuer to learn the exact time your payment is due, but avoid cutting it this close.
When it's close to your due date, you may be able to avoid a late fee by making an expedited payment online or via telephone. Lenders often charge an extra fee for expedited payments, particularly if a customer service representative processes your payment to help you avoid a late fee. Luckily, the expedited fee is often less than a late fee.
If you're not often late on your credit card or loan payments, your lender may waive the late fee if you ask.