Late Fees

• The U.S. Credit Card Accountability, Responsibility and Disclosure Act places limits on how much creditors can charge cardholders when they make late payments. Your card issuer generally can't charge you a fee of more than $25 for making a late payment. However, a card issuer can charge you a late fee as high as $35 if you made one of your last six payments late. The Credit CARD Act also prohibits late fees that are higher than cardholders' minimum payments. For example, your card issuer can't charge you a late-payment fee of more than $15 if your required minimum monthly payment is $15.
  
  

Penalty Rates

• Credit card companies may apply a penalty interest rate to their customers' accounts if they make late payments. Penalty interest rates are higher than cardholders' standard account rates, and some penalty rates may exceed 28 percent. However, customers have the right to continue to pay the previously lower rate on their existing balances under the Credit CARD Act. The act limits penalty interest rates to new charges only, unless an account becomes 60 days delinquent. In such cases, card issuers can apply the penalty rate to a cardholder's existing balance as well as new charges.
  
  

Credit Bureaus

• Some card issuers report late payments to credit bureaus after their customers are 30 days behind on their payments. Other issuers don't report late payments to credit bureaus until customers' payments are 60 days late. In either case, cardholders don't have much recourse as long as their creditors report accurate information to credit bureaus. Cardholders' who believe inaccurate late payments are in their credit files can dispute the information with the bureaus reporting it to try to get the information removed from their files. However, cardholders need canceled checks or other evidence to prove they made payments on time to back up their dispute.
  
  

Debt Collection

• Your card issuer may turn over your account to a collection agency if you haven't made payments for several months. Again, cardholders have little recourse against a creditor in such cases. However, collection agencies must follow U.S. laws for fair debt collection practices. For example, a collection agency must reveal the amount of a debt to a consumer without inflating the charges. It's also against the law for collectors to threaten consumers in an attempt to collect a debt.