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Can a late fee be charged for non-payment of a late fee?

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SandCastles

Junior Member
Can credit card companies continue to charge a late fee each month for non-payment of a late fee? For example, a minimum payment is late by 2 days. A late fee is applied. The merchandise is returned and no balance is due, except the late fee and interest. However, the credit card company applies another late fee the next month on the original late fee balance. Then they apply another late fee the next month. Is this considered "pyramiding late fees" and therefore, illegal?

I am receiving conflicting answers regarding this and would appreciate an answer from someone in the know! THANKS!
What is the name of your state (only U.S. law)? CALIFORNIA
 


ecmst12

Senior Member
The original late fee becomes part of your balance once the statement cycles. So if you fail to pay before the next due date, of course you are going to get another late fee.
 

You Are Guilty

Senior Member
The original late fee becomes part of your balance once the statement cycles. So if you fail to pay before the next due date, of course you are going to get another late fee.
UNLESS, and only unless, the original late fee was added in error. As you would have no duty to pay an erroneous fee, then you can't be charged late fees for not paying it. Of course, if the CC company disagrees with this position, then you will need a court order to change their mind, so it's sort of an academic point anyway, but one worth noting.
 

SandCastles

Junior Member
From the FederalReserveBoard.gov website:

Section 227.15 Unfair late charges

Q15-1: Basic definition of unfair-late-charges prohibition. What does the rule prohibit with regard to the imposition of late charges?

A: Under the rule banks are prohibited from levying or collecting any delinquency charge on a payment, when the only delinquency is attributable to late fees or delinquency charges assessed on earlier installments, and the payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period.


Doesn't this indicate that banks can't put a late fee on a late fee if that's the only balance due? Am I misunderstanding something?
 

Antigone*

Senior Member
From the FederalReserveBoard.gov website:

Section 227.15 Unfair late charges

Q15-1: Basic definition of unfair-late-charges prohibition. What does the rule prohibit with regard to the imposition of late charges?

A: Under the rule banks are prohibited from levying or collecting any delinquency charge on a payment, when the only delinquency is attributable to late fees or delinquency charges assessed on earlier installments, and the payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period.


Doesn't this indicate that banks can't put a late fee on a late fee if that's the only balance due? Am I misunderstanding something?

Are you saying that the balance that you are carrying is only as the result of late fees...that's it?
 

SandCastles

Junior Member
That's correct. As I stated in original post, the merchandise was returned and there is no balance due - except 3 late fees plus interest on the late fees.
 

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