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late fee


Definition: A late fee is a fee imposed when your payment is received after the due date or grace period. When you have a balance on your credit card, your payment is due somewhere between 21-25 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're 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 - $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.

Maximum Credit Card Late Fee

Starting August 22, 2010, there's a cap on the maximum late fee. Credit card issuers can charge a maximum late fee of $25 or $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 past the due date.

How to Avoid 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. You can avoid late fees completely by making your full payment before the due date. 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.

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