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Credit Card Late Fees to Rise in 2020

Credit Card Late Fees to Rise in 2020

*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated May 05, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

Credit card late payments are getting more expensive.

Effective Jan. 1, 2020, the Consumer Financial Protection Bureau (CFPB) raised the permissible maximum for credit card late payment fee to $29, up from $28. For subsequent violations made within six billing cycles, the maximum fee that can be charged rose from $39 to $40.

We’ll break down the CFPB’s decision and provide tips on how to avoid late fees.

Why the increase?

Every year, the CFPB makes adjustments to late fees based on inflation. Initially, the Credit CARD Act of 2009 set maximums for late fees up to $25 for the first instance and up to $35 for additional instances within six billing cycles. If you pay on time for six months, your late fee maximum will fall to the lower first-instance fee.

But with the CFPB’s inflation adjustments, maximum late fees tend to fluctuate annually by about $1. Late fees may increase, decrease or remain the same.

When issuers implement the increase

Issuers can implement late fee increases as soon as Jan. 1. But that doesn’t mean your issuer will announce the increase immediately. Some issuers may choose not to increase late fees at all. However, if your issuer decides to increase its late payment fee, you’ll receive a notification stating how much and when the change takes effect. Some cardholders may have already received a notification.

Who is affected?

Nearly all credit cards charge late payment fees, with 99% of banks imposing late fees on credit cards, according to the CompareCards 2018 Credit Card Fee study. So if you have a credit card and miss a payment, you will most likely incur a late payment fee.

While it’s not required that your issuer raise late fees, once one issuer schedules an increase, it’s common for others to follow. Considering many major issuers currently imposed the 2019 maximums of $28 for first-time late payments and $39 for subsequent late payments within six billing cycles, it’s likely most issuers will increase late fees to the 2020 rates.

How to avoid late fees

No one wants to be charged a fee for something that’s avoidable. Here are several ways to avoid pesky late fees:

  • Set up autopay. An easy way to avoid late fees is to set up autopay. By using autopay, you won’t have to worry about remembering to pay your bill each month. Autopay can conveniently be set up for your minimum payment, full statement balance or another amount.
  • Ask your card issuer for a waiver. If you miss a payment, you can call your card issuer to ask if the late fee can be waived. It never hurts to ask, and many issuers can be understanding, especially if this is the first time you’ve paid late.
  • Use a credit card that doesn’t charge a late payment fee. While hard to find, a handful of credit cards don’t assess late fees.

Which cards don’t charge late fees?

While most credit cards charge late fees, some cards don’t, or provide a one-time waiver.

Here are some options, which also have no annual fee:

No late fees ever

Discover cards assess no late fee the first time you pay late

Here are some popular Discover cards:

  • 0% for 14 months on purchases and Balance Transfers, then 11.99% - 22.99% Variable.

  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically. *

  • Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically*

Highlights
  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.
  • Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Redeem cash back in any amount, any time. Rewards never expire.
  • Use your rewards at Amazon.com checkout.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
  • No annual fee.
  • Discover is accepted nationwide by 99% of the places that take credit cards.
  • See Rates & Fees

See additional details for Discover it® Cash Back

More Info

  • 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically

  • Credit line will equal your security deposit of $200 or more*

  • No annual fee, no late fee on your first late payment. No penalty APR*

Highlights
  • No Annual Fee, earn cash back, and build your credit with responsible use.
  • It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
  • Establish your credit line by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
  • See Rates & Fees

See additional details for Discover it® Secured

More Info

Missing a credit card payment happens to most everyone at some point, and it can be a painful lesson. If it’s a first-time offense, consider calling your issuer to waive the fee. Know that even if the fee is waived, your issuer may still report the late payment to the credit bureaus, negatively affecting your credit score. Only time and regular on-time payments will offset the damages.

The information related to the Citi Simplicity® Card - No Late Fees Everhas been independently collected by CompareCards and has not been reviewed or provided by the issuer of this card prior to publication.


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