Among the plethora of credit card and bank fees—overdraft and ATM, interest charges, and more—late fees on credit card payments are a proven pain point for Cushion’s customers. We’ve detected nearly $2 million in late fees on our customers’ accounts since we launched in 2018, and that number grows daily. With late fees, time is of the essence—these charges not only sting in the moment, but they could have enduring consequences, such as on your credit score. First, let’s establish what a late fee is.
Your credit card company, credit union, or other issuer will send you a statement at least 21 days before your bill is due; it specifies your total amount due and the required minimum payment. If you don’t pay by the due date, or pay less than the minimum amount, you will get a late fee.
Issuers calculate their late fees differently. Some charge a percentage of your balance. Others operate on a tiered late fee system. For example, they will charge a relatively low fee if your balance is below $1,000, a little more if you’re between $1,000 and $2,000, and a higher fee if it’s more than $2,000. But many have a flat fee; after analyzing more than 50,000 late fees, Cushion found that the average late fee is $34.30.
Some issuers don’t charge late fees at all or forgive the first incident; credit unions, in general, tend to charge less for late fees. When issuers do charge late fees, they are regulated by the Credit CARD Act of 2009. Late fees are capped based on a consumer price index, however the Consumer Financial Protection Bureau can increase or decrease the price ceiling each year to account for inflation. It’s common for issuers to charge less on your first late payment, then raise the fee for subsequent late payments. The current maximum charges allowed are $29 for first-time late fees and $40 for subsequent occurrences; this is up from $25 and $35, respectively, when the law passed in 2009.
Specifics are laid out in your issuer’s terms and conditions. It may be rigorous, but it’s important to read these details carefully to ensure you understand their expectations for cardholders.
There are several things you can do, both proactively and retroactively, to make sure you have a handle on your late fees:
Read more about the enduring consequences of late credit card payments here.
Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $11 million in bank and credit card fee refunds—and we’re just getting started.
*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.