What is a late fee?

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In a Nutshell

Paying your credit card bill late can result in a late fee that increases your balance. Here’s how late payment fees work, along with some tips on how to avoid them.

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A late fee is what your credit card issuer might charge if it doesn’t receive the monthly minimum amount due on your credit card account on time.

You can find the card’s late payment fee in your card’s credit card agreement. If you’re charged a late fee it should be reflected on your next billing statement.

While you can also be charged late fees on rent, mortgage, auto or other payments, credit card late payment fees come with their own set of regulations. Keep reading to learn more about credit card late fees, how they can affect you, and how to stay on top of your payments to avoid late fees.

How do credit card late fees work?

Many credit card companies charge a late fee if they don’t receive at least the minimum payment due on your account on time. Keep in mind that if you mail your credit card payment, the issuer typically determines the payment date by the date it receives payment, not by the postmark.

There are also rules for how much a credit card company can charge for a late fee. When you’re late with a payment for the first time, a credit card company can charge a late fee of up to $28. If you pay late a second time within the next six monthly billing cycles, the credit card issuer can hike the late fee up to as much as $39.

But you can only be charged one late fee per monthly billing cycle.

More reasons to avoid a late fee

Paying your credit card bill late can cost you in more ways than one. Paying late could lead to any of the following, depending on your card issuer:

  • Depending on how late your payment is, you could be charged a penalty APR (a higher APR that may be applied to existing and future balances).
  • Since a late fee is added to your balance, you might end up paying interest on the late fee amount.
  • Late payments may appear on your credit reports. (Your payment history can have a major impact on your credit.)

If you’re charged a late fee and thought you paid on time, check your statement for the amount due for the billing cycle in question. Make sure you mailed a check to the correct address or confirm that an online payment went through on time. If you paid on time, call your credit card company, explain the situation and ask an agent to waive or credit the fee.

At your request, some credit card companies may waive a late fee the first time you’re late. But it’s not a good idea to make a habit of paying late and asking for a waiver, since removing the fee is a courtesy, not a requirement.

What happens if you miss a credit card payment?

How to reduce the chance of a late fee

To help you avoid making late payments, consider setting up email or text reminders with your credit card issuer, says Bruce McClary, vice president of communications at the National Foundation for Credit Counseling. You can also set up autopay — but if you do, keep a close eye on it.

“You can’t just set it up and take your eyes off of it,” McClary says.

Monitor your account to verify correct payment amounts and dates.

If you receive credit card bills via snail mail, check your mailbox regularly so that you don’t miss credit card statements. Does your due date always fall a few days before payday? Consider asking your credit card issuer to change it to a date where you’ll be less likely to miss the payment deadline.

Bottom line

Ultimately, the best way to beat paying credit card late fees is to pay your bill on time and in full. Set up reminder notifications or autopay along with a calendar reminder to help you avoid both late payment fees and the potential hit to your credit, too.