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Account management

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

If you repeatedly miss payments, you could rack up significant debt just from credit card late fees

Summary

Just weeks after the CFPB raised the maximum possible credit card late fee, issuers began hiking fees on new cards. According to a new CreditCards.com survey, seven out of 16 of the country’s top issuers now charge up to $40 when credit card holders repeatedly miss their bills.

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It’s getting increasingly expensive to fall behind on credit card payments.

Just weeks after the Consumer Financial Protection Bureau (CFPB) raised the maximum possible credit card late fee, issuers began hiking fees on new cards. According to a new CreditCards.com survey, seven out of 16 of the country’s top issuers now charge up to $40 when credit card holders repeatedly miss their bills. That’s the maximum allowable fee under rules that were passed a decade ago to protect consumers from excessive fees.

See related: What’s the penalty for going over my credit card limit?

Maximum fees are now higher than they were when the CARD Act passed

A little over 10 years ago, lawmakers passed a bill called the Credit CARD Act that limited how much lenders could charge when a cardholder missed a payment. At the time, issuers typically charged a maximum late fee of $39. That’s $1 less than the maximum fee charged now.

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.

For example, the maximum late fee for cardholders who have never missed a bill is now $29 – $4 higher than the $25 maximum fee allowed in 2010.

Average late fees are poised to keep climbing

Lenders that have hiked fees since Jan. 1 include American Express, Bank of America, Barclaycard, Citi, Comenity, Discover and U.S. Bank.

Several other big-bank lenders, including Chase and Capital One, currently charge the maximum allowable fee from 2019: $39.

Among 16 of the country’s top issuers, four charge up to $39 on all or most of their cards. Just five charge less than $39. Based on previous behavior, most issuers that currently charge a maximum late fee of $39 are likely to hike late fees to $40 sometime in the next year.

As a result, the average credit card late fee is all-but-certain to grow higher before the CFPB readjusts fees in 2021. Currently, the average credit card advertises a maximum fee of $37.

See related: 2019 Credit Card Fee Survey: Premium rewards, card missteps get costlier

Maximum late fees as of May 2020

IssuerMaximum late fee
American ExpressUp to $40
Bank of AmericaUp to $40
BarclaycardUp to $40
Capital OneUp to $39
ChaseUp to $39
CitiUp to $40
DiscoverUp to $40
Navy Federal Credit UnionUp to $20
Pentagon Federal Credit UnionUp to $28
PNC BankUp to $38
U.S. BankUp to $40
USAAUp to $35
Wells FargoUp to $37
Synchrony BankUp to $39
Credit OneUp to $39
ComenityUp to $40

Not all card issuers are charging maximum fees, though. Wells Fargo, for example, caps fees at $37. USAA caps them at $35.

Meanwhile, many credit unions charge even less when cardholders fall behind. Pentagon Federal Credit Union, for example, charges a maximum $28 late fee. Navy Federal Credit Union charges up to $20.

Some banks, such as Discover, will even forgive a cardholder’s first late payment. Others, such as Citi, waive fees altogether on select cards. The Citi Simplicity® Card*, for example, doesn’t charge a late fee ever, even if you repeatedly send payments days or weeks after your bill is due.

The new Apple Card doesn’t charge late fees either. Neither does the PenFed Promise Visa Card.

Late fees vary by how much you owe and how often you’ve been late

Lenders are only allowed to charge you a maximum late fee when you’ve repeatedly missed payments. If it’s your first time paying late, the most an issuer can charge you is $29 (up from a previous maximum of $28 in 2019).

Lenders will often adjust how much they charge based on your current balance. For example, if you’ve borrowed more than $1,000 on your card, you may get charged a higher fee than you would have been charged if you only owed a few hundred dollars.

Unfortunately, it’s not always clear exactly 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 offer’s terms and conditions page. So, when comparing offers, you may need to call a lender to get more detailed information.

How to avoid credit card late fees

Don’t give up just yet if your credit card bill is coming due and you can’t afford to pay it.

If you’re struggling with cash flow, consider selling something from your home or borrowing from a friend or family member so that you can pay at least the card’s minimum. Even if your credit card’s minimum payment is high because of an extra-large balance, you’re still better off scraping up just enough money to pay the lowest amount possible than you are racking up repeat $40 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.

Also look at whether other loans or household bills you owe charge a lower fee. Many people blow off their credit cards first when they can’t afford to pay all of their bills one month. But that could be an expensive mistake – especially if a late payment also causes your APR to spike.

If you’re really in a crunch and need to pay something late, you may be better off temporarily going without internet or cable, taking the bus instead of driving or making some other emergency cut so you make it through until your next paycheck arrives.

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. You may be surprised by how willing they are to work with you.

If you tend to pay late simply because you’re disorganized or forgetful, you have even more options. Set up bill payment reminders with your credit card issuers. Or consider setting up automated payments.

See related: How to remove negative items from your credit report

Final thoughts

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 at all.

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 card, that waives the fee for your first late payment.

Thanks to a plethora of options, you shouldn’t have to put up with excessively high late fees.

*All information about Citi Simplicity has been collected independently by CreditCards.com and has not been reviewed by the issuer. Citi Simplicity is no longer available through CreditCards.com.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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Credit Card Rate Report Updated: October 21st, 2020
Business
13.91%
Airline
15.50%
Cash Back
15.85%
Reward
15.75%
Student
16.12%

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