Credit Card Late Fees Climbing Next Year – Plus 5 Ways Overdue Payments Hurt Your Finances

Submitted by Rachel R on Mon, 12/26/2016 - 9:02am

Credit Card Late Fees Climbing Next Year – Plus 5 Ways Overdue Payments Hurt Your Finances

Beware increased credit card fees in 2017

Image Source: StockSnap.io

If you occasionally pay a credit card payment late, 2017 is the year to break this bad habit. The Consumer Financial Protection Bureau (CFPB) has allowed an increase in late payment fees next year and these can now be as high as $38 for a delinquent payment made more than once in a six-month period. If you only miss one within a six-month period, the sting is still $27. That’s not cheap and $38 is even worse. Find out why late fees are on the rise and five other ways overdue payments hurt you.

Which Card Issuers Are Raising Late Fees?

American Express, for one, plans to increase its late payment fees in 2017, and other card issuers may follow suit. The good news from the CFPB report titled “The Consumer Credit Card Market” is that fewer people are incurring penalty fees. The rate of penalty fee occurrence dropped from almost 4% in 2008 to less than 2.5% in 2015. The CFPB study also showed that fees such as late penalties and over limits account for roughly 20% of the total cost of credit.

How Are Late Fees Changing?

In the Credit Card Act of 2009, late fees were capped at $25 for the first late payment in six months and $35 for the second late payment. In 2016, the late payments rose once again. Now, once you go six months without missing a second payment, you’ll go back to paying the lower amount if you run late again. Now it will be $27 and $38, which is not a huge hike but it’s bad enough. According to Nerd Wallet, seven card issuers are currently at the maximum rate and might move up again in 2017.

Five Ways Late Payments Hurt Your Wallet

Paying a late payment on a card balance is the same thing as seeing a hike in your interest rate. It’s cash out of your budget sent to the credit card company. Here are other ways late fees affect yo:

#1 Credit score decline

If you miss a payment by just a day or two or even a week, you’ll pay the fee, but it can get worse from there. If the payment is more than 30 days late, your card issuer could report to the credit bureaus and your FICO score could take a hit.  

#2 Grace period canceled

Check out your credit card terms and conditions and you might find that violating your agreement to pay promptly could terminate the grace period you normally enjoy on purchases. That means the second you swipe, interest can accrue.  

#3 Meaningless rewards

For those that have a rewards card, you should know that rewards are only beneficial if they outweigh the cost of credit. For instance, if using your rewards card gains you a benefit of $20 that month and a late fee runs $27, you’re not benefiting.

#4 Promotions canceled

Some new card accounts, balance transfer deals, and special promotions come with low or even 0% interest rates. Buried in the terms for that credit card offer is a caveat that if you violate the terms of the promotion, you lose the deal and your rates can rocket sky high.

#5 Higher interest rates

In addition to losing a promotional rate, if you have one, you can be hit with a penalty interest rate. This can kick in once you hit 60 days late on a credit card payment per your card issuer terms and agreements. If you carry a balance, this can start costing you money right away.

Final Thoughts on Credit Card Penalties

To avoid incurring late fees, pay your card payments on time. Set up a calendar and stick to it. You might want to pay on your cards twice a month when you get your bi-weekly paychecks to avoid any interest. Another solid tip is that you shouldn’t buy anything unless you can afford to pay off at month is another solid tip.

If your credit card debt is so out of control that you’re regularly missing credit card payments, are maxed out, and dealing with debt collectors you might need a serious debt intervention. Contact the Law Offices of John T. Orcutt for a free North Carolina bankruptcy consultation today. Call +1-919-646-2654 now for an appointment at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.

 

 

Resources:

CFPB Report 

Debts Hurt! Got debt? Need help? Get started below!

Serving North Carolina

  • Charlotte
  • Fayetteville
  • Durham
  • Wilson
  • Greensboro
  • South Raleigh (Garner)
  • Southport (Phone Consults)
  • Wilmington (Phone Consults)

North Raleigh

6616 Six Forks Rd Suite 203 Raleigh, NC 27615 North Carolina

Tel: (919) 847-9750

North Raleigh

Charlotte

7400 Carmel Executive Park Dr Suite 105 Charlotte, NC 28226 North Carolina

Tel: (704) 318-2702

Charlotte

Fayetteville

2711 Breezewood Ave. Fayetteville, NC 28303 North Carolina

Tel: (910) 323-2972

Fayetteville

Durham

1738 Hillandale Road Suite D Durham, NC 27705 North Carolina

Tel: (919) 286-1695

Durham

Wilson

2215 Nash St. NW Wilson, NC 27896 North Carolina

Tel: (252) 234-9194

Wilson

Greensboro

600 Green Valley Road Suite 210 Greensboro, NC 27408 North Carolina

Tel: (336) 542-5993

Greensboro

South Raleigh (Garner)

143 Highway 70 Garner, NC 27529 North Carolina

Tel: (919) 747-4400

South Raleigh (Garner)

Southport (Phone Consults)

4320 Southport Supply Road SE Suite 300 Southport, NC 28461 North Carolina

Tel: (910) 218-8682

Southport (Phone Consults)

Wilmington (Phone Consults)

4320 Southport Supply Road SE Suite 300 Southport, NC 28461 North Carolina

Tel: (910) 447-2987

Wilmington (Phone Consults)