Credit Card Late Fees: What You Need to Know

Credit card companies charge late payment fees when you fail to make a payment or pay the full minimum amount by your due date. It might not seem like a big deal, but credit card late fees can be expensive and increase the more often you pay late.

Here's what you need to know about how credit card late fees work and how to avoid them.

Credit Card Late Fee Definition

When you create a balance on your credit card, you typically have a grace period, which lasts at least 21 days after the billing cycle ends, to pay it. If you don't make at least the minimum payment by the due date, you're charged a late fee. The amount of the late fee will depend on the issuer. Some issuers base the late payment fee on your credit card balance. Commonly, however, the fee will be fixed, regardless of how much you owe.

The good news is credit card companies can't charge any amount they wish. Under the Credit CARD Act of 2009, credit card late fees are capped. The Consumer Financial Protection Bureau can adjust caps on late fees each year based on the consumer price index. Late payment fees stay the same if the consumer price index doesn't change enough to move the fees up or down by a full dollar. However, if it increases or decreases more than that, the CFPB will reset fees accordingly.

The most recent change occurred on Jan. 1, 2019, when credit card late fees were raised by $1. These new limits mean that the highest late fee that can be assessed the first time you're late is $28 (up from $27) and $39 for all future late payments (up from $38).

The maximum late fee is about $36 on average, according to U.S. News research.

[Read: Best Credit Cards for Fair Credit.]

How Much Is Your Credit Card Late Fee?

Credit card late fees vary depending on your card. This information can be found in the fine print of the credit card agreement you're presented with when you open a new account.

"You can also find this information online even before applying for a credit card, as most banks list their terms and conditions for each credit card on the page of their website dedicated to that card," says Rod Ebrahimi, founder and CEO of Upturn, a company that helps consumers find and fix credit report errors for free.

Ebrahimi points out that it might seem cumbersome to read through all the terms of service, but it's important to review them when opening a credit card account. "You can learn a lot through a credit card's terms of service, including all associated fees," he says.

What Happens When You Make a Late Credit Card Payment?

A late payment fee is more than just a financial nuisance. Paying bills late has wider-reaching consequences.

For one, late fees can cost you even more in added interest charges and contribute to an ongoing cycle of debt if you aren't careful. "Most credit card companies will add the late fee to your balance on the card. The downfall is that if you don't pay the late fee, the credit card company will earn interest on your late fee," says Adam Marlowe, principal experience officer for Georgia's Own Credit Union.

Your credit score, annual percentage rate and rewards can take a hit when you miss payments, too.

[Read: Best Credit Cards for Bad Credit.]

Can Credit Card Companies Waive Late Fees?

According to Marlowe, most credit card companies are willing to waive late fees in certain instances. After all, the goal is to keep good customers. So if you mess up only once in a while, there's a good chance the issuer will work with you to keep you happy. "Late fees are meant as a form of punishment because you didn't fulfill your contractual obligations. Given that, most companies will forgive that as long as it's not habitual," Marlowe says.

It's rare for a card issuer to automatically waive late fees; only about a dozen do this, according to U.S. News research. Most will require you to contact a representative and request that a late fee be reversed. Below are the late fees and waiver policies for some of the most popular card companies.

-- American Express: $27 for the first late payment and up to $38 for a second late payment within the following six billing periods. Late fees will not exceed your minimum payment due. AmEx considers a number of factors when deciding whether to waive a late fee; you can request to have a late fee waived by calling customer service at 800-528-4800.

-- Bank of America: $27 for the first late payment and up to $38 for a second late payment within the following six billing periods. Late fees will not exceed your minimum payment due. If your total balance due on the payment due date is $100 or less, you won't be assessed a late fee. It's possible that Bank of America will waive your late fee the first time; future late payments may be tougher to get waived. You can call credit card support at 800-732-9194 to request a late fee be waived.

-- Capital One: $25 for the first late payment and up to $38 for a second late payment within the following six billing cycles. You may request to have your late fee waived by calling Capital One at 800-227-4825, though the decision to waive late fees is at the discretion of the issuer.

-- Citi: $25 for the first late payment and $35 for subsequent late payments within the following six billing cycles. Late fees will not exceed your minimum payment due. Citi may waive your late payment fee; call customer service at 800-950-5114 to make the request.

-- Discover: Discover will waive your first late fee. You can call 800-347-2683 to make the request. A second late payment will incur a fee of $28 if you have not been charged a late fee during the prior six billing periods. All other late payments within the six billing periods will result in a fee of $39.

[Read: Best Rewards Credit Cards.]

Avoiding Late Payment Fees

Though many credit card companies will waive late fees, it's in your best interest to avoid late payments and fees by paying at least the full minimum amount by the due date.

If you have trouble remembering to make payments on time, it's a good idea to schedule automatic payments through your credit card or online banking platform. If you're worried about having enough money in your account for auto pay, you can also set up calendar reminders or text alerts for a few days ahead of the due date.

Also note what time your payment is due in addition to the date. Paying past the cutoff time, which is usually between 5 p.m. and midnight, can result in a late fee even if you technically paid on the due date. If you're cutting it close, you might be able to make an expedited payment via the web or phone. Keep in mind, however, that you might be charged a fee for this option. Even so, it's likely worth it since expedited payments usually cost much less than a late payment fee.

Casey Bond is a seasoned personal finance writer and editor. Her work has appeared in a number of major national publications including U.S. News & World Report, Yahoo Finance, MSN, The Huffington Post, Business Insider, Forbes and others. Follow her on Twitter @CaseyLynnBond.