What is a late payment fee?
A late payment fee is a charge that is imposed if a credit card payment is not made on time. This fee is typically assessed when a payment is more than 30 days late. This fee is similar to a penalty fee, though this particular fee is intended to cover the cost of processing late payments. In Illinois, the late payment fee cannot exceed the lesser of either $25 or the amount of the minimum payment that was due in the previous billing cycle. Additionally, a maximum of two late payment fees can be assessed within a six-month period for the same credit card account. It is important to note that late payment fees are considered finance charges, and as such, they must be disclosed in the cardholder agreement. In Illinois, cardholders must also be notified at least 30 days prior to any change in the late payment fee amount. If a credit card payment is made on time, the late payment fee can be avoided. Therefore, it is important for consumers to develop a budget and make sure that they are able to make credit card payments on time each month. Paying off credit card debt can help consumers stay on top of their finances and reduce the risk of late payment fees.
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