Credit card late fees: How much issuers charge if you slip up

Credit cards come with a lot of perks but if you miss payments, the cost of late fees and interest can outweigh them.

Keep reading to learn what credit card late fees are, how they work, how much they cost and – most important – how to avoid them.

How do credit card late fees work?

It’s getting increasingly expensive to fall behind on credit card payments. Luckily, there are consumer protections in place that put a limit on how high a late fee a credit card issuer can charge, thanks to the Consumer Financial Protection Bureau’s (CFPB) cap on fees.

You’ll be charged a credit card late fee when you miss your first payment. Your first late payment will cost you $30 (as of 2022) or the amount of your minimum payment – whichever is greater. Credit card issuers can start to charge late fees the first day a cardholder’s minimum payment is overdue.

How much do issuers charge for a credit card late fee?

Lenders are only allowed to charge you a maximum late fee when you’ve repeatedly missed payments.

In 2009, lawmakers passed a bill called the Credit CARD Act, which limits how much lenders can charge when a cardholder misses a payment. At the time, issuers typically charged a maximum late fee of $39.

In 2010, the Federal Reserve capped the maximum possible fee at $35 but the CFPB adjusts that fee every year to allow for inflation. As a result, even first-time offenders are paying significantly more now when they send in a late payment.

As mentioned, if it’s your first time paying late, the most an issuer can charge you (as of 2022) is $30. But if you miss another payment due date within six billing cycles, you can expect to pay up to $41.

Lenders will often adjust how much they charge based on your current balance. For example, if your balance is more than $1,000 on your card, you may get charged a higher fee than if you have a balance of a few hundred dollars.

Unfortunately, it’s not always easy to find out how much an issuer will charge you if you accidentally forget a payment. Many lenders only put a card’s maximum possible fee on a credit card’s terms and conditions page. So, when comparing offers, make sure you read the fine print.

How to avoid a late fee

Many people blow off their credit card payments first when they can’t afford to pay all of their bills in one month. But that could be an expensive mistake – especially if a late payment also causes your APR to spike.

If you’re struggling with cash flow, consider borrowing from a friend or family member so that you can make at least the minimum payment. Even if that minimum payment is high because of an extra-large balance, you’re still better off scraping up enough money to pay it than you are racking up repeat $41 late fees.

If your income has been affected by the COVID-19 crisis, check with your card issuer to find out if it can offer a fee waiver or payment deferral. You may also want to call each of your lenders and ask if they’d be willing to work out some kind of hardship plan for you.

If you tend to pay late simply because you’re disorganized or forgetful, set up bill payment reminders with your credit card issuers or use automatic payments.

Bottom line

If you still feel like you’re at risk of occasionally missing a payment because you’re chronically disorganized or your budget is tight, look for cards that don’t charge a late fee – they do exist.

Or, shop for cards from a credit union or smaller bank with lower fees. Even if you have bad credit, you can still pick a card, such as the Discover it® Secured Credit Card, that waives the fee for your first late payment (after that, you’ll pay up to $41).

Before you miss your credit card payment, remember that you have options. With a little bit of planning, you shouldn’t have to pay expensive late fees.