Credit Card Late Fees Savings Mistake

The Alarming Cost of Credit Card Late Fees

According to a study by the Consumer Financial Protection Bureau (2019), the average credit card late fee is $38. Assuming a late payment every 3 months, this can cost a consumer $152 per year. For example, if a consumer has a credit card balance of $1,000 and makes a late payment every 3 months, they can expect to pay an additional $152 in late fees per year, on top of the interest charges.

Why Credit Card Late Fees Add Up So Quickly

Credit card companies calculate interest on late payments based on the outstanding balance. For instance, if a consumer has a credit card balance of $500 and makes a late payment, the interest can accumulate quickly. According to Bankrate, the average credit card interest rate is 20.6%. Over 6 months, the interest on a late balance of $500 can add up to $51.60, making the total amount owed $551.60.

Strategies to Avoid Credit Card Late Fees

To avoid credit card late fees, consumers can follow these practical tips:

1. Set up payment reminders: Consumers can set up payment reminders on their credit card issuer’s website or mobile app to ensure they never miss a payment.
2. Make payments online: Making payments online can help consumers avoid late fees by ensuring timely payments.
3. Take advantage of grace periods: Consumers can take advantage of the grace period, which is typically 21-25 days, to make payments without incurring interest charges. As NerdWallet suggests, consumers can also consider setting up automatic payments to avoid late fees.

The Impact of Credit Card Late Fees on Credit Scores

Late credit card payments can negatively affect credit scores. According to Experian, a single late payment can lower a credit score by 60-110 points. Avoiding late fees can improve credit scores over time. For example, if a consumer has a credit score of 700 and makes all payments on time for 6 months, their credit score can increase by 50-100 points.

Automating Credit Card Payments to Save on Late Fees

Setting up automatic payments can help consumers avoid late fees. To set up automatic payments, consumers can follow these steps:

1. Log in to their credit card issuer’s website or mobile app.
2. Navigate to the payments section.
3. Select the option to set up automatic payments.
4. Choose the payment amount and frequency. As CreditCards.com suggests, consumers can also consider setting up automatic payments through their bank’s online banking system.

Negotiating Credit Card Late Fees with Credit Card Companies

If a consumer has already incurred a late fee, they can try negotiating with the credit card company to have it waived. According to Credit Karma, consumers can follow these steps:

1. Call the credit card company’s customer service number.
2. Explain the situation and ask to have the late fee waived.
3. Be polite and persistent. For example, a consumer can say, ‘I’ve been a loyal customer for 5 years and have always made my payments on time. I recently missed a payment due to unforeseen circumstances and was charged a late fee of $38. Can you please waive this fee?‘

Frequently Asked Questions

How much do credit card late fees cost?

The average credit card late fee is $38, according to the Consumer Financial Protection Bureau.

Can I avoid credit card late fees?

Yes, consumers can avoid credit card late fees by setting up payment reminders, making payments online, and taking advantage of grace periods.

How do credit card companies calculate interest on late payments?

Credit card companies calculate interest on late payments based on the outstanding balance. The interest can accumulate quickly, making the total amount owed increase over time.

Can I negotiate credit card late fees with credit card companies?

Yes, consumers can try negotiating with credit card companies to have late fees waived. They can call the customer service number, explain the situation, and ask to have the late fee waived.

What is the impact of credit card late fees on credit scores?

Late credit card payments can negatively affect credit scores. A single late payment can lower a credit score by 60-110 points.

How can I check my credit score for free?

Consumers can check their credit score for free using Credit Karma Free Credit Scores and Reports. They can also use Credit Karma Free Credit Scores and Reports en Amazon to monitor their credit score and report.

My Take

As an app developer and professional chef, I understand the importance of managing finances effectively. I’ve seen many consumers struggle with credit card debt and late fees. My advice is to set up automatic payments and take advantage of the grace period to avoid late fees. Additionally, consumers can use The Total Money Makeover en Amazon to get out of debt and build wealth.

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Practical Summary

• Set up payment reminders to avoid late fees
• Make payments online to ensure timely payments
• Take advantage of the grace period to avoid interest charges
• Set up automatic payments to avoid late fees
• Negotiate with credit card companies to have late fees waived
• Check credit score for free using Credit Karma Free Credit Scores and Reports
• Use Credit Karma Free Credit Scores and Reports en Amazon to monitor credit score and report

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Written by Vladys Z. — App developer and professional chef. Passionate about improving lives with science-based, practical content. Follow me on YouTube.