Understanding the new credit card rules
Credit cards on keyboard
credit cards
5 new rights for credit card users

Limits on penalty fees
3 of 7
Credit card statement, balance in closeup

Before the law took effect, issuers could impose $39 late fees for past due payments regardless of the minimum payment amount. The Credit CARD Act changed this practice by requiring that penalty fees be "reasonable and proportional to the violation of the account terms." The Federal Reserve set safe harbor caps of $25 for the first violation and $35 for a repeat offense within six billing cycles. To go higher than those amounts, the issuer would have to prove that the costs it incurs as a result of the violation justifies a higher fee.

In addition, the penalty fee cannot exceed the dollar amount associated with the violation. For example, if the minimum required payment of $20 isn't paid on time, the issuer cannot charge a late fee of more than $20. Issuers can only charge a consumer one penalty fee for a single violation in a billing cycle.




Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 16.24% --0.00 16.24%
Cash Back Cards 16.48% --0.00 16.48%
Low Interest Cards 11.27% --0.00 11.27%
Credit cards on a table

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.


Credit Card Blog

Mitch Strohm

Website builder credit data hacked

The credit card information of approximately 93,000 customers of the website builder Web.com was compromised on Aug.13.  ... Read more

Partner Center

Connect with us