At some point in your life you’re probably going to be hit with a credit card late fee – things just seem to happen.  Fortunately, as you learn in Ch. 6, the new credit card rules that went into effect on August 22, 2010 put a limit on how much that late fee can be.  Under the new rules from the Federal Reserve, there is a maximum late fee of $25 that you can be charged unless one of your last 6 payments was late – in that case the maximum goes up to $35, unless your credit card company can show that its cost justify a higher rate.

Worse than the late fee is the fact that that late payment may impact your credit rating.  And as your credit rating drops, the cost of borrowing goes up.  So how should you deal with credit card late fees?  The first thing to do is to avoid them.  A recent article in Kiplinger.com titled “11 Credit Card Mistakes to Avoid” pointed out 11 costly mistakes to avoid which included things like using up all available credit, ignoring your monthly statement, and racking up foreign transaction fees.

But what do you do when you when you’ve screwed up and are hit with late fees?  The answer is to try to negotiate them down.  If you don’t give it a try, you’ll have no idea whether you can actually do it.  Unfortunately, most people just don’t know how to approach a credit card company – or at least how to approach them successfully.  The best plan is to have a script in mind before you make the call – and there’s a great one on the Mint.com website in an article titled “Use this Script to Negotiate Credit Card Late Fees.”  Next time you get hit with a let fee, give it a try.  It may be the easiest money you’ve made in a long time.

Discussion questions:

1. Have you ever been hit with a credit card late fee?  If so, which one of the reasons listed in the article “11 Credit Card Mistakes to Avoid” caused the late fee?
2. Have you ever tried to get a late fee dropped?  If so, were you successful?
3. Have you ever used your credit card for a cash advance?  If so, how much did it end up costing you – or do you even know the answer to that?