Legal Definitions - late charge

A late charge is an additional fee or penalty imposed by a creditor, lender, or service provider when a payment is not received by the agreed-upon due date. This charge is typically outlined in a contract or agreement and is intended to compensate the payee for the inconvenience, administrative costs, and potential loss of interest incurred due to the delayed payment.

Here are some examples to illustrate the concept of a late charge:

• Example 1: Utility Bill

  Imagine a homeowner receives their monthly internet bill, which states that payment is due by the 20th of the month. The bill also specifies that if payment is not received by the 25th, a $10 late fee will be applied to the next billing cycle. If the homeowner forgets to pay until the 28th, their next bill will include the standard service charges plus an additional $10.

  This $10 is a late charge because it is an extra fee imposed due to the payment being made after the grace period following the original due date.

• Example 2: Apartment Rent

  A tenant signs a lease agreement for an apartment that stipulates rent of $1,500 is due on the 1st of each month. The lease further states that if rent is not paid by the 5th of the month, a late fee of $50 will be assessed. If the tenant's rent payment is not processed until the 7th of the month, they will owe $1,550 for that month's rent.

  The additional $50 is a late charge, as it is a penalty for failing to submit the rent payment by the contractual deadline.

• Example 3: Credit Card Payment

  A consumer has a credit card with a minimum payment due date of the 10th of each month. The credit card agreement specifies that if the minimum payment is not received by this date, a late payment fee of up to $40 may be applied. If the consumer mails their payment on the 9th, but it doesn't reach the credit card company and isn't processed until the 12th, they may find a $40 charge added to their outstanding balance.

  This $40 is a late charge, levied because the required payment was not posted to their account by the stipulated due date.