Published in: Credit Cards | Feb. 8, 2020

Credit Card Late Payment Fees Could Go Up in 2020

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The maximum permissible credit card late fee is on the rise. Here's how much you could be expected to pay if you're late.

Paying your credit card bill late has always been a big financial mistake. 

After all, a late payment means you get hit with fees and even a single late payment could seriously hurt your credit score. If your payment is very late, it could even give your creditor leverage to raise your interest rate.

Unfortunately, it's more important than ever to avoid late payments as maximum late fees will be even more expensive in 2020.  

A distraught man sitting at his desk and reading bills with his chin in his hand.

Image source: Getty Images

Maximum late payment fees are on the rise this year

In 2009, the Credit Card Accountability Responsibility and Disclosure Act (aka the CARD Act) imposed some new rules to protect consumers. One of those rules was a limitation on the amount a credit card company could charge customers who didn't pay their bills on time.

Late fees were initially limited to $25 for the first late payment and $35 for each subsequent late payment made within six billing cycles. To make sure these limits kept pace with inflation, the Consumer Financial Protection Bureau was authorized to adjust them each year.

By last year, the maximum late fee had climbed to $28 for a first late payment and $39 for additional late payments. And now in 2020, it is going up again by $1. This means the new maximum late payment fee in 2020 will be:

  • $29 for the first late payment
  • $40 for any additional late payments made within six billing cycles

Not every creditor charges the maximum fee so the penalty for paying your specific card late will not necessarily go up. But many credit issuers do impose the maximum allowable penalty and if yours is one of them, you should expect to pay more if you fail to pay your bills on time. 

While a $1 increase may not seem like a lot, paying $28 or $39 was already a big financial hit -- especially for someone who was struggling to pay their bill in the first place. The additional $1 just makes the situation a little bit worse.

How to make sure you avoid a late payment penalty

With rising penalties for late payments, now is a better time than ever to make sure you don't end up owing a fee. 

One of the best ways to do this is to sign up to have payments automatically taken from your checking account. That way, you don't have to worry about remembering to schedule a payment or send in a check. However, if you maintain a low balance in your checking account, this may not be a good idea because it could send you into overdraft.

If you can't set up automatic debits for at least the minimum payment, consider setting a reminder on your calendar or using an app to alert you when your payment is about to come due. Some credit card companies also issue alerts themselves, sending you an email or text when you are about to hit the deadline. 

While ideally, you should fully repay your entire outstanding statement balance each month to avoid interest charges, this isn't always possible. But by paying the minimum, you can at least avoid the newly-increased penalties that card issuers impose for being tardy.

Don't get hit with higher credit card late fees

Credit cards can be a great way to earn rewards for your spending, but you need to be responsible about how you use them. The most important responsibility you have as a cardmember is to pay your bill on time. 

If you don't, the hit to your credit coupled with the fees you'll owe could cost you dearly. The increase to the maximum late fee in 2020 is just another reason to make sure you avoid the dire consequences a late payment can bring.

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