In 2009, the Card Act was passed to help consumers better understand their credit card fees. The act put a limit on the amount credit card companies could charge for a late payment, but there are no concrete maximums for penalty rates. If you make a late payment, there are two types of penalties a credit card company can charge:
Late Payment Fee: this is a one-time fee that can be as much as $35.
Penalty Rate: this is a change to your interest rate that may happen if you are 60 days late making a credit card payment. The penalty rate is the new interest rate charged on your existing credit card balance and on all new purchases.
The Card Act of 2009 requires that card companies review accounts and remove penalty rates after an individual makes payments on time for six consecutive months. For most credit cards the penalty APR is 29.99%.
Related: Review Roundup: Perkstreet Financial
(Image via Flickr)