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Understanding Credit Card Late Fees and Their Impact

At O1ne Mortgage, we prioritize educating our clients about consumer credit and finance. This article will help you understand when a credit card payment is considered late, how late fees work, and what you can do if you miss a payment. For any mortgage service needs, feel free to call us at 213-732-3074.

When Is a Credit Card Payment Considered Late?

A credit card payment is considered late if it does not arrive by the due date and time indicated on your statement. If the due date falls on a weekend or holiday, the cutoff time is the next business day. Late payments can result in late fees, penalty interest rates, and damage to your credit score.

Consequences of Late Payments

• 1 to 29 days late: Card issuer can charge a late fee.
• 30 to 59 days late: Card issuer can report the account as 30 days delinquent to credit bureaus.
• 60 days late: Card issuer might impose a penalty interest rate that applies to your card’s current balance.
• 90, 120, and 150 days late: Card issuer continues to charge interest and report late payment.
• 180 or more days late: Card issuer may close your account, charge off the account, or send it to a collection agency.

How Do Credit Card Late Fees Work?

Late fees are typically explained in your credit card’s terms and conditions. They may be charged if your payment is late or you paid less than the minimum. The amount charged may depend on how much you owe, your payment history, and the issuer’s limits on late fees. Fees may also be higher if you are repeatedly late.

How Much Are Late Fees?

According to the Consumer Financial Protection Bureau (CFPB), the typical credit card late fee is about $32. Although the CFPB recently capped late fees at $8, this change is yet to go into effect and is currently facing legal challenges. For now, consumers should assume the fees listed on their credit card terms and conditions are the ones they will pay if they pay credit card bills late.

Can You Get a Credit Card Late Fee Waived?

You may be able to get a late fee waived. If you’re late with a payment, make at least the minimum payment and then contact the issuing bank to see whether you can get the fee waived. Be prepared to explain why the payment was late, outline steps you are taking to prevent this from happening again, reference your payment history, and mention how long you have been a customer.

How Does a Late Payment Affect Your Credit?

A payment that is less than 30 days late does not appear on your credit reports, so it won’t affect your credit scores. However, late payments that are at least 30 days late can be reported to credit bureaus and potentially damage your credit scores since payment history is the most important factor in calculating credit scores.

What to Do if You Miss a Credit Card Payment

If you miss a credit card payment, try to pay at least the minimum amount due to bring the account current. Then, if you think you have a case for asking the issuer to waive the fees, contact them. If you cannot pay your credit card bill, contact your credit card issuer to describe the issue and propose a repayment plan. If your financial situation doesn’t look like it is going to improve, consider getting help from a credit counselor.

Tips to Avoid Late Fees

• Setting up autopay to cover your minimum payment.
• Setting up payment alerts via email or text.
• Choosing a credit card without late fees.

The Bottom Line

Credit cards can charge a late fee if they receive your payment after it’s due. Automatic or electronic payments can ensure that payments arrive on time to avoid late fees. If you have a history of on-time payments or a very good explanation for why your payment was late, you may be able to get your credit card issuer to waive the fee. However, fees and penalty interest rates may not be the costliest consequence of paying late. A missed payment can be reported to credit bureaus and result in lower credit scores.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey.

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