In fact, federal law allows for certain credit card costs to change as often as annually.
For 2020, the threshold for the following credit card fees increased:
- First late payment penalty: $29 — up from $28 in 2019
- Subsequent late payment penalty: $40 — up from $39 in 2019
These changes took effect Jan. 1.
Just note that the above amounts are limitations: They represent the maximum amount that a credit card company can charge for such fees this year. So, it’s possible that your credit card company won’t hike the amount it charges for these fees in 2020.
Why credit card fees rise
Under federal law, the U.S. Consumer Financial Protection Bureau (CFPB) calculates credit card late fee limits annually based on the Consumer Price Index, which serves as a measure of inflation.
So, late fee limits can change as often as every year.
These limits apply to open-end consumer credit accounts, not credit accounts that are secured by a home.
Avoiding credit card late fees
The only surefire way to avoid credit card late fees is to quit using credit cards — an impractical solution for many consumers.
The best practical preventive measure, then, is probably to set up automatic payments.
You should be able to do that by logging in to your account online. But if you can’t figure it out, contact your credit card company’s customer service department.
When I log in to my credit card account, for example, I can choose one of three amounts to be paid automatically every month on my bill’s due date: the minimum payment, the statement balance or a dollar amount of my choice. Choosing even the minimum payment would be sufficient to avoid late fees.
Paying anything less than the full balance, however, generally results in interest charges. If you aren’t paying your credit card bills in full each month, you might want to consider transferring the balances to a no-interest credit card.
You can find and compare such cards using a free online resource like Money Talks News’ credit card search tool. Or, simply check out “3 Great 0% Interest Credit Cards for Ringing in 2020.”
If you ever incur a late payment fee or other credit card fee, ask your credit card company if it will waive the fee. A 2019 CompareCards survey found that among cardholders who had asked for a waiver of a late payment fee, 87% received it.
What’s your take on the rising thresholds for credit card late payment fees? Sound off below or on our Facebook page.