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Late Fees

In the classic television detective series Columbo, which starred Peter Falk, Lieutenant Columbo always seemed to be distracted and disorganized, but in reality he was extremely focused and observant. One common scene that brought delight to fans of the show was when Columbo left a room in which he had been speaking to the murderer. He kept turning around and starting question after question with, “Oh, just one more thing…” Then he trapped the criminal. Well, the credit card companies are not Lieutenant Columbo and we consumers are certainly not murderers, but when it comes to trapping us in the fine print of their credit card agreements, it always seems like there is “just one more thing.” Your monthly payment is due on whatever date of the month it says on your credit card bill. If your payment is late, the fine print of your credit card agreement provides for the right of the credit card company to assess a late fee, which can be as much as $35 for each late payment. In the past, some credit card companies gave their customers five or even ten days of grace after the due date before assessing a penalty, but that is not the situation any longer. So you send your payment with sufficient time to arrive at the credit card company on your bill's due date. But, just one more thing: Some credit card companies deem your payment late if it is processed later than 1:00 p.m. on the day of your due date. Some credit card companies don't receive and process mail until after 1:00 p.m.; therefore, the real date by which your monthly payment must be received is a day earlier than the date indicated on your contract. So you need to make sure your payment gets there three days ahead of the due date. But just one more thing: If the envelope contains a staple, a paper clip, or a note from you, the fine print of the contract specifies that there may be a delay of up to five days in posting your payment. This might cause a late payment to be assessed on a payment that arrived at the credit card company prior to the due date of the bill. I'll bet Lieutenant Columbo read the fine print before sending in his payment.

Another problem with late payments is that they can also trigger penalty interest rates as high as 29%; so, for example, instead of the 10% interest rate your card may carry, your rate will now be jacked up to 29% effective immediately. In fact, even if you are timely in your credit card payment, credit card companies generally reserve the right to raise your rate to a penalty rate if you are late with any other payment to any of your creditors, whoever they may be. Just read the fine print.


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