What is a late fee on a credit card and how do you avoid them?
What is a late fee on a credit card and how do you avoid them?
user
Late fees are charged by the bank on which you have the credit card, and generally are a percentage of the amount you owe.  The bank doesn’t want to lose money, so they want to ensure that they get paid for the money you owe.  A common practice is to add on a monthly “interest” fee which continues to accrue until you pay the debt off.  As a general rule, it’s better to avoid late fees, since they can quickly eat into your credit score.
assistant
So if you don't pay on time then they charge the late fee?
user
Yes, usually you pay interest on top of the original balance you owe.  So if you don’t pay at the end of each month, the balance just continues to increase.
assistant
So basically it is better to pay on time so you don't get the late fee and get charged a ton of money.
user