The Credit Card Laws Regarding Past Due Payments

Regulations that restrict late payment charges still leave cardholders vulnerable to paying high fees.

Regulations that restrict late payment charges still leave cardholders vulnerable to paying high fees.

Late credit card payments can hamper your credit history for seven years or more. Nonetheless, creditors have some limitations on how much they can make cardholders pay for missing their payment due dates. Despite that, couples who rack up late payment penalties and fees on credit cards could spend many years digging out of debt.

Late Fees

Credit card issuers generally haven't been allowed to charge late payment fees of more than $25 since the U.S. Credit Card Accountability, Responsibility and Disclosure Act of 2009 took effect. Nonetheless, loopholes in the act allow for higher fees. For example, your creditor can charge a late fee of up to $35 if one of your last six payments also was late. Late payment fees were as high as $39 before the 2009 legislation took effect, according to the Federal Reserve Board.

Minimum Payments

Your minimum monthly payment also dictates how much your creditors can charge if you pay late. For example, a credit card issuer can't require you to pay a late fee that exceeds $15 if your required minimum payment is $15. However, you could see your interest rate go up considerably if the creditor applies a penalty interest rate to your account for paying late. Some penalty interest rates are as high as 29 percent.

Interest Rates

Young adults who are just starting to build credit have some protection against interest rate increases even if they pay late. Credit card companies can't increase interest rates on customers' new accounts for one year, unless they pay more than 60 days late. Interest rates also can increase the first year you have a credit card if the card has a variable interest rate. A variable rate is linked to an index of interest rates, and your interest rate can increase whenever the index does.

Multiple Fees

Credit card companies can't hit you with multiple fees for one transaction that violates their cardholder agreement. Late payments usually violate such agreements, according to the Federal Reserve Board. Nonetheless, your monthly credit card statement shouldn't show more than one fee associated with making one late payment. Furthermore, federal law requires that cardholders have the same payment due date each month to help them avoid missing payments.

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