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The Truth about Late Fees

Karen Gibbs

Hi Karen, I missed my credit card payment by one day and was charged a late fee.  Will that affect my credit score?- Brenda from Baltimore

Past Due

Brenda, join the club.  I think we’ve all been there.  But there’s good news.  Generally being just one day late won’t affect your credit score, but it depends on your credit card issuer and your payment history.  Some lenders track payments in 30-day increments; 1-30 days late; 31-60 days late and 61-90 days late. While credit rating agencies may not consider a payment late until it is 30-59 days in arrears, you don’t want to have a history of late payments.  Payment history can account for as much as 35% of your credit score.

While your credit score may not get hurt, you will feel it in your wallet.  Most credit card issuers charge a late-fee if payment is not received by the close of business on the due date.  If this is your first late payment, you may be able to call customer service and ask for it to be waived.  Don’t be surprised if you’re turned down, as these fees are how many credit card issuers make money over and above the interest charged.  The more late fees charged, the more revenue and the happier the company and its shareholders.

Some lenders may offer you the convenience of automatic debits to your checking account.  The Federal Reserve calls this a “pre-authorized transfer”, where you authorize your credit card company or other service provider to deduct your monthly payment from your checking account automatically.  It may be convenient, but pre-authorized transfers can be hard to stop.  The Treasury Department’s Office of the Comptroller of the Currency report scams and rogue payments can plague automatic debit programs.  If you’ve had problems contact them.

But you don’t have to resort to automatic debits.  Once again, technology comes to the rescue.  Online banking is secure, convenient, inexpensive and leaves a paper trail.  There are also free apps for your computer, iPhone and/or iPad that will help you manage and pay your bills, such as this app

If modern technology is not your bag, an old fashioned calendar can be used just as successfully.  Take into account how long it takes for payment to arrive (snail-mail or electronic payment).  Also, check to see if your payment due date falls on a weekend or holiday.  Neither the post office nor banks deliver on Sundays or holidays.

Once you get into the habit of scheduling your payments, whether with apps or the old fashioned way, you’ll find you never miss a payment or incur a late fee.  The bonus is that an on-time payment history will boost your credit score and you’ll relieve some of the stress that comes with paying bills.  

Good luck!


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