Credit card late fees explained

Highlights

• A late fee is usually charged if a bank receives a payment after the due date.
• Your credit card’s terms and conditions has information about late fees, including when they’re charged and how much they may be.
• You can usually avoid late fees by setting up automatic payments for at least the minimum amount due on your credit card each month.

Your cardmember agreement is a good resource for how late fees work on your credit card. That’s because banks may handle late payments differently.

In this article, we’ll offer some general answers to several common questions about credit card late fees:

• What are credit card late fees?
• How do late fees work?
• What are examples of credit card late fees?
• How could you avoid a credit card late fee?
• Can you get charged a late fee on a late fee?

What are credit card late fees?

A late fee is the dollar amount that may be charged to your account if the card issuer doesn’t receive the minimum credit card payment by the due date. Sometimes, there may be a grace period between the end of a billing cycle and the date your payment is due. A late fee won’t be charged if payment is received in that time frame. The duration of a grace period varies mostly by credit card issuer and by card.

How do late fees work?

The timing and amount of a late fee depend on your card’s terms and conditions. In general, when your credit card issuer receives the set minimum payment a certain number of days past the due date, a late fee may be charged. When you’re charged a late fee, you’ll probably receive a notice from your bank. That notice should include the amount of the late fee and any balance that is past due. The notice may also suggest steps you can take to pay the fee and outstanding balance.

What are examples of credit card late fees?

Issuers may use different time frames to determine when they assess a late fee, but it’s usually a certain number of days after the due date. Days may be counted in business days or in calendar days, including weekends and holidays.

The late fee itself can vary, too, and it’s often determined by your bank or credit card issuer for each late payment. Sometimes the credit card’s balance is used to determine the late fee. Sometimes the payment history is a factor in determining if and how much of a late fee is charged. Banks may also set limits on the fee amount they charge, regardless of how late a payment is received.

How could you avoid a credit card late fee?

The main way to avoid credit card late fees is to make sure the minimum amount due is paid by the due date on your credit card statement. To achieve that, you have some options.

Make manual payments

If you choose to pay your credit card manually, you can often do it online. You'll have to repeat the process of making a manual payment each month. You should also have the option to mail your payment, you should do so well in advance of the due date. When making a manual payment online or by mail, account for any weekends or holidays that may affect when a bank sends or receives your payment.

Rely on automatic payments

Setting up automatic payments is another way you can avoid a late fee on your credit card. Using automatic payments usually means you won't have to wonder anymore when or if your payment will reach a bank on time. To set up online payments, you may need your checking account number and nine-digit bank routing number. There may be several payment options to choose from, including the minimum amount due, full statement balance or a custom amount.

In summary

Credit card late fees are usually charged when a bank or card issuer receives the minimum payment past your due date. Your financial institution will decide what constitutes a late payment, when a late fee is charged and the fee’s amount. As a result, details about late fees can be found in your credit card’s terms and conditions. One way you can usually avoid credit card late fees is by setting up automatic payments.