Maximum credit card late fee falls $1 for 2016, to $37
Charge for multiple late payments falls to $37
Thanks to low inflation, the maximum late fee that credit cards can charge has fallen by $1 for 2016.
The annual inflation adjustment from the U.S. Consumer Financial Protection Bureau capped the maximum charge that cards can charge for a first late payment is $27, and up to $37 for subsequent lapses within six months of the first one. That's the same as 2015 for the first offense, but down $1 for repeat offenses.
The federal Credit CARD Act of 2009 allowed the imposition of caps on late fees. The law called for penalty fees to be "reasonable and proportional" to the violation. The law initially limited late fees to $25 for the first lapse and $35 for subsequent ones.
Before the act was passed, late fees of $39 were the norm.
The CFPB publishes its announcement of the inflation adjustment each fall. To update the figures, the consumer bureau looks at inflation measures published by the Labor Department as of June 1 and adjusts the thresholds accordingly, rounded to the nearest dollar.
Some classes of credit cards, such as business credit cards, are not covered by the federal law. They can, and often do, continue to charge late fees in excess of the federal cap amounts.
In another threshold adjustment, the CFPB left unchanged the minimum interest charge disclosure requirement of $1. So card companies may require a minimum interest payment of $1 or less per billing cycle without necessarily disclosing it.See related: 5 ways to avoid (or deal with) late fees, Fee survey: Average card has 6 fees
Published: January 11, 2016
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