One day late, one dollar short means late fee


Credit Smart
Credit Smart columnist Susan C. Keating
Susan C. Keating is the president and chief executive officer of the National Foundation for Credit Counseling. Prior to joining the NFCC, Keating spent 29 years in financial services. She was the highest ranking female CEO of a U.S. bank holding company, serving as president and chief executive of Allfirst Financial Inc., the largest U.S. holding of AIB Group. She currently serves on Bank of America's National Consumer Advisory Council and is a board member of the Council on Accreditation. Keating also participates in the Financial Regulation Reform Collaborative, a nonpartisan group committed to finding solutions for reforming financial services regulation.

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Dear Credit Smart,
I have a closed credit card account with a balance of about $1,700. I have not missed any payments, which are due on 21st of each month. However, by mistake, I paid $57 dollars instead of the $61 minimum. The company charged me a late fee of $35. I paid online on the 21st and they posted on the 22nd. – VW


Dear VW,
The rules for credit card payments are specific. If you break any of those rules, chances are you are going to be charged a late fee.  Late fees are not fun and can often seem unfair, so be sure you know what your credit card company requires when it comes to the amount of your payment and the timing of your payment. 

From your question I am assuming that your minimum payment each month is $61. The credit card company must receive the full minimum payment on time each month. Even though you were only short $4, the company still considers that payment as insufficient to keep from incurring a late charge. This is why the month you paid $57 by mistake you were charged a late fee. It may not seem fair that a $4 mistake should cost you $35, but the rules are clear.

The same is true about when you make your payment. Chances are you made your payment on the 21st after the cutoff time. This time is listed in on your statement, but you may have to search a bit to find it. It may be that you paid on the correct date and what you thought was the correct time, but the time listed was in another time zone from where you live. For instance, if you live in California, which is Pacific time, and the cutoff time on your statement says your payment must be received by 5 p.m. Eastern time, you will need to have your payment made by 2 p.m. If not, you run the risk of another late charge. Remember that even 5 minutes late is too late. 

Don’t cut it close. Whether you paid online by going directly to the card issuer, or if you used your bank’s online payment system, the process is not instantaneous. Banks’ online payment systems commonly require five business days to process a payment. So going online to make a payment on the day a payment is due may not be quick enough to dodge a late fee.

You do have the option of calling the credit card company to see if they will waive the late fee. Most people who call for a credit card late fee waiver get one, but I don’t know that you will have much luck. For one thing, some time has passed since you were charged the late fees. A call to the company immediately after you see the charge is the best time to make that call. Also, because your account is closed, you may not have any luck getting the late charges waived. The credit card company is under no obligation to waive those fees and usually will only do that for current customers. Still, it never hurts to ask.

I would suggest you set up your payment online automatically so that you won’t run into this problem again before you have paid off this account. Be sure the payment will be drafted in plenty of time to reach the creditor by its cutoff time.

Remember to always use your credit smarts!

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Published: July 16, 2016

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Updated: 10-24-2016

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