How bad are late fees?
June 14, 2006 8:30 AM   Subscribe

My credit card company seems to have recently shrunk the grace period. I have made two late payments (barely late, 2-3 days) as a result. I have paid in full each time, should I be worried about it hurting my credit score?

I use my credit card solely for boosting my credit rating and have been diligent about using the credit card for everything in order to make my credit worthiness look better. Shrinking grace periods smell foul to me, and then the punitive measures of $40 late fees makes it look less like a credit company and more like the mafia.

Is this a universal practice in the credit card industry? Are there better cards out there in regards to this? I care little about mileage and other perks, I'd rather have more leniancy with issues like this. Would canceling this card and jumping on a new one hurt my credit? What about these two late fees, has my credit rating been hurt?
posted by geoff. to Work & Money (13 answers total)
Probably will not hurt your score, but it is best to contact them directly and ask. They might hit you with late charges if it continues... as stated above call them and get it from the horses mouth.
posted by edgeways at 8:35 AM on June 14, 2006

If you call, you can probably get at least one of the late fees cancelled. Just tell them you were caught off guard by their policy change, to review your otherwise spotless payment history, etc.
posted by mikepop at 8:44 AM on June 14, 2006

Yeah, what mikepop said. It's very easy to get these late fees waived, if you call and politely complain.
posted by kingjoeshmoe at 8:51 AM on June 14, 2006

Can't comment on if it'll hurt your rating, but to avoid this in the future - does your card company allow you to set up a direct debit or something to make the minimum payment each time automatically?

After missing a payment once myself I set this up. I pay in full every month by hand, but I know if I forget I'll not get hit with late payments, sudden demands and will only get hit with the interest on the outstanding balance.
posted by edd at 8:55 AM on June 14, 2006

When I bought a house a few years back I was curious to see if late payments of this sort (paid within a week of the due date, assessed some kind of fine) impacted my credit rating, and it didn't have any effect (think about it: basically they know you're good for it, just scatterbrained, plus they get to jack you for 20 - 50 bucks every time you screw up. Think they don't want you for a customer? If you really think their policy changed, call and ask about it if you don't feel like poring over the little pamphlets of rules changes they send (bastards snuck a damn annual fee under my nose just the other day) or (gasp!) don't keep them.

Also feel free to cancel your card and get another, this won't hurt your credit rating either, or just stop using the other - getting another card won't hurt you either unless you go overboard. There is a lot of competition in the credit industry, it pays to shop around. They may also sweeten your deal if you threaten to quit, and will probably waive at least one of the late fees. But they probably won't change their policy on late fees over it - that stuff is their bread and butter.
posted by nanojath at 8:59 AM on June 14, 2006

My understanding (and I could be wrong), is that late credit card payments are only reported and counted if they are 30 days (or more) past due. Less than that, they may charge you late fees and can raise your interest rates and do whatever they want to your credit card account, but it won't affect your score.
posted by tastybrains at 9:08 AM on June 14, 2006

under 30 days late, may affect your APR but not your credit report.
posted by Izzmeister at 9:17 AM on June 14, 2006

I believe there is a time before it gets reported, like 30 or 60 days. Call Customer Service and be polite and ask for forgiveness. It can happen that they will waive it. Then, every two weeks make a payment for what you owe electronically.

Cancelling credit cards can decrease your redit rating, FWIW.
posted by 6:1 at 9:29 AM on June 14, 2006

6:1, so can just not using them in favor of a better rate or bonus. It's called "available credit'. I was once turned down for a card I wanted because of all the over priced (high interest) cards that i had but never used.
posted by Gungho at 9:47 AM on June 14, 2006

This is mentioned by Izzmeister above but needs to be stressed IMO: The fine print says that when you are late (even a day) they can raise your APR. And, just to clarify: They WILL raise your APR, and by a ridiculous amount. Find out a very clear answer to this question. I have had cards raised to 29.99% after being a day or two late. Of course, you just have to whine and complain and threaten and they will reduce it again.
posted by poppo at 9:50 AM on June 14, 2006

I used to get periodically hit with a late fee on my credit card (usually due to negligence on my part). I don't carry a balance, so the late fee represents almost all the money my credit card company gets from me.

I use my bank's free online bill payment system, so the last time it happened I setup an automatic recurring payment to them of the minimum payment. I pay the remainder on the day I pay the rest of my bills. This way if I somehow forget or am late I never get hit with the late fee.
posted by justkevin at 9:55 AM on June 14, 2006

I'm pretty sure it needs to be 30 days late for it to affect your credit score, each month can basically take on a value of 'OK, 30 days late, 60 days late or 90 days late'
posted by delmoi at 1:44 PM on June 14, 2006

If it's just a matter of timing the due dates to when you're paid, you usually can call up the credit card companies and get that changed. I did that a couple of times (back when it made a difference to me) when I changed jobs and my paydays changed.
posted by sevenless at 2:54 PM on June 14, 2006

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