U.S. Consumers Were Charged $14.5 Billion in Credit Card Late Fees in 2022. Here's How You Can Avoid Them

While credit cards are a helpful payment tool, they should be used with care. It's essential to only spend what you can afford and pay your bill on time every month. Otherwise, you'll be charged extra fees. A recent study found that U.S. consumers spent more than $14 billion on late fees in 2022.

Find out how much the average late fee is and discover what steps to take to avoid fees like this.

Credit card late fees totaled $14.5 billion last year

The Consumer Financial Protection Bureau (CFPB) conducts a biennial report on the state of the consumer credit card market. These data-packed reports provide insight into how U.S. consumers use credit cards. The CFPB recently released its 2023 report, which examines 2022 consumer credit card data.

When credit card users miss a payment or pay their credit card bills late, credit card issuers impose late fees. According to the report, in 2022, U.S. credit card users were charged $14.5 billion in late fees. This figure is significantly more than the $11.3 billion in late fees reported in 2021 and $11.9 billion reported in 2020.

While the amount of fees charged can differ by credit card issuer and credit score, the average late fee cost in 2022 for all credit card users was $32. This is up by $1 from $31 in 2021. Even if you only make one late payment a year, it wastes money. It's in your best interest to ensure you pay your credit card bills on time to avoid paying unnecessary extra fees like this.

Paying your bills on time is also wise because payment history significantly influences your credit score. Your payment history makes up 35% of your FICO® Score. Paying your bills on time every month can help you avoid negative marks on your credit report.

Do this to avoid credit card late fees

When life gets busy, it can be easy to lose track of essential everyday tasks. But the good news is there are steps that you can take to eliminate forgetfulness so you're not charged credit card late fees. Here are two options to consider if you're worried about forgetting to pay your bill.

Enable automatic credit card payments

Through your online credit card account, you can set up automatic payments. Once you do this, your bill will be paid automatically each month with your chosen payment method, such as your checking account. If you want to avoid expensive credit card interest charges (as well as late fees), make sure you choose to pay the entire credit card bill, not just the minimum payment due. Doing this can help you avoid carrying credit card debt.

Enable payment reminder alerts

Another option is to enable payment reminder alerts through your credit card account. You can choose to get an email or text message alert reminding you that your bill due date is coming up soon. Most issuers allow you to decide how many days beforehand you get the alert. This is an excellent solution if you want to avoid automatic payments but need an extra reminder.

Check out our personal finance resources for more tips related to essential money matters.