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A Complete Guide To Credit Card Late Fees & Refunds

Sometimes credit card late fees can feel like getting punished for not having enough money. But then the punishment is...asking you for more money?

It's a bizarre system, but it's one that results in big profits for the credit card issuers. The more you owe, and the harder it is to pay back your credit card debts, the more a company can collect through interest. The company might even charge you additional fees such as an annual fee, increase your APR, and deny you your usual rewards.  Late payment fees are just the icing on the cake to throw a wrench in your personal finances and credit history.

You can defend yourself from excessive debt burdens and late fees through this handy guide that covers all the consequences of a missed payment, as well as how to avoid those tricky late fees.

You Have Already Missed A Credit Card Payment—What Happens?

There's lots of advice out there about how to budget and schedule so you don't miss a credit card payment. But what happens when you've already missed a payment?

The bad news is that even one missed payment will result in a late fee the first time and can snowball into a series of consequences that make it hard to recover. The good news, though, is that you can minimize and reverse this impact.  Before reading more about late fees specifically, it is fully possible to get a late fee refund by negotiating them with your credit card issuers.  We cover this in more depth later in this article as well as several other guides in our blog to show you how you can maximize refunds or let our system automatically negotiate them for you.

Late Fees

A missed credit card payment will absolutely result in the dreaded late fee. These will often show up on your account right after you miss your due date for the minimum payment.

Minimum late fees from your credit card lender will likely be at least $30, though some companies split this into tiers. In these situations, you might owe a lower amount, like $15, for small balances. And then you would owe the usual, higher amount for large balances. American Express for examples states that late fees are either $38 or 2.99% of any past due "Pay in Full" amount, whichever is greater.

Depending on the bank, late fee amounts may also differ for the first late payment compared to subsequent late payments.  By law, these fees can't be higher than $39, so they usually hover around there. But this isn't the only amount you'll have to worry about. The credit card company will also make money from the late fee's interest.

And late fees can sometimes lead to more late fees. As we'll explain in a later section, late fees often add to the minimum payment you owe the company every month. And if you can't make this new, higher amount, you'll get—you guessed it—another late fee.

Grace Period

There is a mandatory 21-day grace period for paying the credit card company, but you might not be thinking of it as a grace period at all. This is just the time between a new statement and the due date. You don't get more time after the due date.

So even though there is a "grace period," this likely won't give you more time than you've been factoring in anyway. If you've been thinking of the due date as the main date to keep in mind, keep doing so.

This grace period is also a period of time when you don't have to pay interest on your new statement just yet. So however much you're planning to put down this billing cycle, make sure to do it during this time.

Credit Score

One of the biggest stresses of a missed or late payment is how it might affect your credit score. Credit card companies report to the three credit bureaus (Experian, Transunion, & Equifax), and this helps make up your credit score. When your credit card company reports a late payment, this can lower your score.

Check your credit card company's policy to see how long they wait before reporting the late payment to the credit bureaus. If you can pay back the money within several days, you might be able to get through this without damaging your credit score. This can be pretty crucial—payment history is the number one component of your FICO credit score, making up a whopping 35 percent.

Too often, though, the opposite is the case. If you are having trouble making your minimum payment in the first place, an additional late fee can be hard to swing. And this can make you miss your next payment, resulting in another late fee.

In the meantime, the credit card company will be reporting all this, affecting your credit score. These late payments can stay on your credit report for seven years. All this for missing a minimum payment and getting swept up in the fees!

Penalty for Late Credit Card Payments

As if these additional fees aren't enough, credit card companies can also issue a penalty when you've missed at least two cycles of payments. Legally, this can't happen until you are 60 days late on a payment, according to the Credit CARD Act of 2009.

This penalty comes in the form of something called a penalty APR. APR, or annual percentage rate, is the rate of interest you have to pay on your credit card statements. If you're at least 60 days late on payments, your credit card company can raise the APR, causing you to owe more interest on your entire balance.

This doesn't have to last forever, but it might last a while. Legally, your credit card company has to assess the situation at least every six months. If you've been able to make some payments in that time, you might be able to go back to your normal APR.


These days, credit card companies offer rewards like points, cashback, and airline miles. For some people, this is a nice bonus. And for others, it's a system they depend on in order to book flights or maximize the amount of money they earn.

But however you think of rewards, you should know that late payments often trigger a loss of those rewards. Each credit card company has its own policy about this, but many companies will use loss of rewards as an additional punishment. And for the company, it doesn't hurt that they make even more money off of your late payment by denying you these rewards.

Some companies will also make you jump through hoops to reinstate those rewards. They might charge you a new fee called a "reinstatement fee." This might sound a bit ridiculous, but it's what credit card companies to do pad their bottom line.

Changes to the Minimum

You might find that once you miss a credit card payment, your minimum monthly payment changes. This is because minimum payments can be either as a set value or a calculation.

The set value (usually around $35) is the default. When you get a late fee that exceeds that, though, you'll have to pay using the calculation. This is a combination of the late fee, a percentage of your balance, and any interest that might have accumulated for the billing cycle.

This is another reason why one late fee can lead to another. A higher minimum payment makes it hard to pay future bills.

Indirect Financial Penalties

Aside from all the direct ways credit card companies charge you for struggling with your bill, there are other challenges to consider as well. For example, a low credit score can result in higher fees whenever you need to make a big financial decision.

Low credit scores can pressure you into taking out loans with high interest rates. They can also result in higher security deposits when you rent an apartment. In fact, a landlord can reject your application based on a low credit score alone.

Where the FICO Credit Score Factors In

If it looks like you'll have to face the effects of a late payment on your credit score, you might be interested in knowing what will make this worse vs. not-so-bad.

The FICO credit score factors in the amount you owe, the number of times you missed a payment, and how long it took for you to get back on track. So even if you're already receiving a ding on your credit score, you might be able to make it a little better by reducing the amount of time it takes to pay the money back.

Timing for Credit Card Late Fees

When is your minimum payment actually due? If you're paying online, you might have until midnight to make the payment before it's considered late. Make sure to check, though—sometimes the latest possible time is 5:00 pm or 8:00 pm.

And if you make the payment after the offices close for the day, you might receive a late fee that is then removed once the payment goes through. If your late fee doesn't go away, call the credit card company to make sure you won't be charged for a payment that was actually on time.

Check the time zone as well. Midnight for the credit card company might only be 9:00 pm for you.

How To Calculate CC Late Fees And Interest Charges

Calculating the late fee itself will be pretty straightforward. Add up any fees that might have accumulated over multiple billing cycles. And make sure to factor in a reinstatement fee if you've lost rewards and want to get them back.

If you're not considering the interest, though, you might be missing a large part of the equation. First of all, there's the interest from the late fee itself. Then there's the interest from your credit card balance—if you've been missing payments, the associated charges will only increase.

Use the APR (or penalty APR, if applicable) to determine these interest rates. You can get the monthly interest by dividing the APR by 12. So the total calculation for how much you owe in fees and interest every month should be:

Your late fee + (monthly interest × late fee) + (monthly interest × balance) + reinstatement fee if needed.

How To Avoid Late Fees

The best way to save yourself from this web of fees and charges is to avoid late fees in the first place. We know this is easier said than done, but there are a few things you can try:

Negotiate a Refund on the Late Fee

If it's only been one or two days past due your most recent credit card payment, you may be able to negotiate with the credit card company for a late fee waiver. Call them and explain your situation.  Be firm but polite and explain to them that you've been a loyal customer and would appreciate the late fee refund.

We have several guides on how to get refunds or you can also use our negotiation system to make the process easier for you. We offer this service to help you secure refunds for late fees and the associated interest charges.

Protect Yourself!

Credit card late fees can turn into a tangled web of charges, interest, and other fees. When you're already struggling to make the minimum payments, this financial pressure can force you to make bad money decisions.

The best thing to do is avoid these credit card late fees if at all possible. Even if you've missed a payment, you might be able to get this forgiven at least once. So go ahead and advocate for yourself! Or use our automated negotiation platform to advocate and negotiate late fee refunds for you.

And if you want to learn more about what Harvest can do to help with financial health, browse through our Frequently Asked Questions. We're in this together.

About the Author

Harvest helps increase the net worth of the 99% through artificial intelligence and financial automation. To date, Harvest has refunded over $2M in bank fees and interest charges to its members with the ultimate goal of increasing the net worth of everyday Americans by $1 trillion by 2030. Our platform starts with providing immediate relief through bank fee and interest charge refunds, orients a member's financial health with our proprietary PRO Index, and keeps track of net worth over time aided by our suite of financial tools. Check out our 8-step guide on "How to Build Wealth from Nothing" to get started on increasing your net worth.

Disclaimer: Harvest is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.