As a financial writer, I've probably written hundreds of times about the importance of paying your credit card on time. So imagine my chagrin when I opened my credit card statement last year and found a $28 late charge, plus a charge for credit card interest.
This came as quite a shock as I always pay off my credit card in full and on time. But that particular month I must have started the online payment process but not followed through. So I inadvertently missed a payment.
At first this looked like a costly mistake — one that could possibly damage my good credit score and cost me money in the form of a huge late fee.
The good news is, it didn't turn out that way and the whole problem was surprisingly simple to fix.
How credit card late fees work
Credit card late fees are charged when you don't make at least the minimum payment on or before the date it’s due. Typically, when your statement closes for the billing cycle, you'll have around a 21-day grace period before you have to make a payment. The minimum payment due and the date by which it must be made are included on your monthly statement.
Generally, you do not have an additional grace period after the due date, as you would with other loans such as a mortgage. Many card issuers charge a late fee as soon as the designated date for payment has passed without at least your minimum payment being made.
Individual card issuers can decide how much, if anything, they want to charge you when you're late making a payment. But the Credit Card Act of 2009 imposed a maximum cap on the amount of late fees a card issuer can charge. This cap changes periodically. In 2019, the most that could be charged was $28 for the first late payment and $39 for any additional late payments that occur within six months of the first one. The maximum penalties went up $1 in 2020, to $29 for the first tardy payment and $40 if you're late again within six months.
Although many card issuers impose the maximum penalty, card companies do have the option to charge a smaller fee or even to charge no late fees at all. You can check the terms and conditions of your credit card to find out when you'll be charged and what amount you'll have to pay to your card issuer if you pass the deadline for making your minimum monthly payment.
When card issuers charge you a late fee, it's usually added onto your statement balance, which means you could be charged interest on it if you don't pay the card off in full including the fee.
How I got my credit card issuer to drop my late fees
When I noticed the late fee on my credit card statement, I immediately knew I needed to call my credit card company to see if they could reverse the charges. But first I made the tardy payment immediately, paying off the balance I owed. Then, I picked up the phone and dialed the number on the back of my credit card.
Here’s what I did when I called:
- I began by apologizing for the mistaken late payment and explained why I hadn't paid on time
- I told them the missed payment had already been made
- I pointed out my long track record with the card company, as I had been a cardholder for several years
- I reminded them I had never been late in paying my card before
- I pointed out that I was a good customer who tends to charge a lot on my card
- I asked them if there was anything they could do about the late fee
Within minutes, the customer service representative not only offered to reverse the late fee but also said he would reverse the interest I had been charged. He said it could take between one to two statement cycles for the credit to show up on my card, but it ended up posting to my online account within just a few days. He also assured me the late payment would not be reported to the credit reporting agencies.
This process took just a few minutes for me and it saved me a lot of money.
If you also make a mistake and pay your bill late, you could take a similar approach by calling your credit card issuer to ask them to waive and refund your fee. You are much more likely to be successful at this if you've made the missed payment already and if you don't make a habit of paying your bill late.
You can find the number to call customer service on the back of your credit card. If you do not have success in getting your fee waived by the first person you talk to, it doesn't hurt to try to call back again and speak to someone else or to send a mailed letter to explain why you were late and request leniency for your slip-up. Many cardholders also report having success getting fees waived after signing into their online accounts and sending a secured message.
Credit cards with no late fees
If late payments are a chronic problem for you, you may want to look for a card that won't charge you if you're tardy in sending in your monthly payment — otherwise, all those fees are likely to make having a credit card very expensive.
There are a some credit cards that don't charge late fees or that promise to waive them, including the following:
- Citi Simplicity® Card: This card charges no late fees and has a $0 annual fee. It also offers a 0% introductory APR on purchases for 12 months (then 19.24% - 29.99% (Variable)) as well as 0% intro APR on balance transfers for 21 months (then 19.24% - 29.99% (Variable)), although there is a balance transfer fee. It can be an especially affordable card if you're trying to get your finances on track but need time to pay off purchases and worry you may be late with a payment or two.
- Discover it® Cash Back: This card will waive the fee on your first late payment automatically, so it's a good choice if you just want to be sure a mistake won't cost you. However, if you miss a subsequent payment you'll be charged a fee of up to $41. It also provides Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.. That makes it an ideal card if you want generous rewards but worry you might accidentally pay your card late.
While these cards won't charge you a late fee, there can still be consequences if you don't pay on time. If you're more than 30 days late in making a payment, this will likely be reported by your card issuer to your credit report. Late payments can be damaging to your credit score, affecting your ability to qualify for credit cards and making it both more difficult and more expensive to borrow if you need a loan in the future.
Bottom line: You don't have to just accept a credit card late fee
Paying late could be one of the more expensive credit card mistakes you can make, especially as late fees have gone up in 2020. You don't have to just accept that a late payment means a huge fee, though.
- The best way to avoid owing a late fee is to always pay on time. You can set up automated payments so the money comes right out of your bank account without you having to remember to pay your bill. This can be done either through your bank or the card issuer. No matter which approach you take, make sure you will have the money in your account so you don't end up owing an overdraft fee instead.
- You can also set up calendar alerts if you use a calendar app, use a personal finance app such as Mint to alert you when your payment is coming due, or sign up for alerts right from your card issuer to remind you when you need to pay.
If you do end up making a late payment despite your best efforts to avoid it, you still have options. If you've generally been a good customer who pays on time, there's no reason not to call your credit card issuer and ask to have the fee waived. Or, since this works best for people who are late infrequently, you may also want to look into getting a card that doesn't charge late fees if you think you may be late more than once a year.
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