New Credit Card Penalty Limits

highwing (sxc.hu)

The Federal Reserve’s new limits for credit card payment penalties took effect August 22, which means that penalty fees for missing a payment on your monthly balance must be capped at $25 for the first violation, but this cap can rise to $35 if you miss paying again within the next six billing cycles or if your credit card issuer can prove that a higher charge is justified. Also, late-payment fees and other types of penalties may not exceed the amount of the violation.

Example: If you are late paying a $20 minimum payment, the missed-payment fee cannot be more than $20, or if you are $10 over your credit limit, you cannot be charged more than $10 in penalty fees. In the past, penalties of $39 or more were common.

Source:  Josh Frank, senior researcher, Center for Responsible Lending, Durham, North Carolina.

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