What Is a Late Fee?

What Is a Late Fee?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

A late fee is an extra charge that you are required to pay when you don’t make your payment on time. It’s usually imposed by service providers, landlords, credit card companies, or any financial institution. These fees are a form of punitive measure designed to encourage timely payment. Businesses often state in their contracts or terms of service when a payment is considered late and how much the late fee will be.

Related Questions

1. What is the typical amount for a late fee?

Usually, late fees vary from business to business and depend on the type and duration of the delay. For most credit card companies, late fees can range from $25 to $35. Some service providers charge a percentage, typically around 2-5% of the owed amount.

2. Is there a maximum late fee a landlord can charge?

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This can vary by state or local laws. Some states don’t have a maximum late fee while others might set a cap. It’s best to check your local state laws or consult with a legal advisor for the most accurate information.

3. Can late fees affect my credit score?

Yes, they can. If a late payment is reported to credit bureaus, it may negatively impact your credit score, especially if the delay is over 30 days.

4. Can late fees be waived?

Yes, they can. In many instances, businesses or lenders might waive a late fee as a one-time courtesy or if you have a solid history of timely payment. However, this isn’t guaranteed and depends on the company’s policies and your relationship with them.

5. Are late fees tax deductible?

Unfortunately, late fees are not tax deductible. Always try to make your payments on time to avoid these additional costs.