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Avoid Paying Late Fees
by John M. Roberts

One of the worst ways to waste money is to pay late fees to creditors.

Late fees are fines or penalties that creditors levy against their customers for not making contractual payments on or before the date the payment is due.

In some contracts, late fees are set at a standard charge while in others, late fees are calculated on a daily rate based on an annual interest rate that is written in the contract. In some cases, a grace period is granted but a late charge will be added if you go one day past the grace period.

In theory, late fees are charged as a way to encourage consumers to make their payments on time but if you look closely, you will find that many businesses make a large portion of their income by charging late fees.

All it takes is a little math to figure out how late fees hurt consumers and how businesses use charging late fees to generate much of their income.

For instance, if you have 5 creditors and each charge a $30.00 late fee per month and you are late on each bill, it will cost you an additional $150.00 for the month simply because you didn't pay your bills on time. If you are late on your payments each month for a year, you will have to pay an additional $1,800 for the year. Now think about the hundreds or thousands of people who are late making their payments each month. If each one of them is charged $30.00 dollars in late fees, that puts additional thousands of dollars in the bank accounts of creditors each month.

The above mentioned scenario may sound farfetched to some, but it is a fact of life for many others.

Late fees are legal and they can be excessive if you are consistently late, those fees can really add up. There are state and federal laws that prohibit creditors from taking advantage of consumers. Each state can place restrictions on how much a creditor can charge as a late fee.

Almost all creditors, businesses, organizations, and government agencies charge late fees. If you don't pay your taxes, the IRS charges late fees and will place liens against your property to collect the debt. Banks, credit card companies, landlords, mortgage companies, large and small businesses, and just about any person or entity that make loans or provide credit charge late fees.

When you owe money on a home, a car, credit cards, or any other obligation that require contractual payments, you are responsible for making the payments. The best way to avoid late fees is to pay your bills on or before the date they are due.

You may forget to pay a bill or forget to make a deposit in their bank account that causes a check to be returned for non-sufficient funds. This happens sometimes. If it does, you may be able to talk to your bank, or creditors, about forgiving the late fee.

Late fees are an unwanted burden that can have a negative impact on your pocketbook. If you are consistently late or behind on your bills, it may be a good idea to seek the help of a professional credit and debt counselor.

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