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This isn’t a “before-and-after” that you like to see: Credit card late fees, which were generally capped at $35 in 2010 and have inched up since, could hit $40 in 2020.
The Card Act, a law aimed at providing greater consumer protections for credit card users, set the $35 limit when it went into effect nearly a decade ago. But the thresholds for such credit card penalty fees are adjusted for inflation each year by the Consumer Financial Protection Bureau, the government agency established nearly 10 years ago to oversee and enforce consumer protection laws.
On Jan. 1, 2020, those permissible thresholds will be bumped up by $1, meaning the new limits for late fees will be:
$29 for the first time you’re late. Previously, these were capped at $28.
$40 for subsequent violations made within six consecutive billing cycles of the first violation. Previously, these were capped at $39.
In the past, such threshold hikes have been followed by major issuers generally increasing their late fees to match. Take 2019, for example. When the upper limits on these penalty fees rose from $38 to $39, eight major issuers nudged up their late fees to match. That’s what could happen in 2020 as the thresholds move up again.
Why late fees are rising
Credit card late fees are generally limited by the Card Act, so issuers can’t charge unreasonable, outsized fees for small infractions. But those limits are still relatively high — $40, after all, might be enough to cover a cart of groceries, or a dinner and a movie — and they’re not set in stone.
These permissible thresholds for penalty fees, which are the amounts banks can charge while complying with the law, are adjusted each year according to a consumer price index. And as inflation has pushed up the permissible fee thresholds for credit card penalties, many major issuers have increased late fees in lockstep.
This doesn’t mean your credit card’s late fees will go up overnight, though. Issuers are generally required by law to give 45 days’ notice before making such changes to existing accounts. If your terms change, you’ll likely get a letter in the mail notifying you.
Got a late fee? Here’s how to recover
Hopefully, you can avoid credit card penalties in 2020. But mistakes happen. If you’re hit with a late fee, here’s how to bounce back.
Ask for a pass
Often, if your account is in good standing — and especially if it’s your first late payment — you can get a late fee dropped just by asking your issuer. Pick up the phone and call the number on the back of your card.
Add reminders for next time
Make it easier to remember due dates. Many issuers allow you to set up alerts through their apps that will send texts or push notifications to remind you when your due date is approaching. Alternatively, you could add reminders to your calendar.
Set up autopay
Autopaying your credit card could be a surefire way to avoid future late fees, and it’s a good option — provided that you can do it without accidentally overdrawing your bank account. Even if you prefer making manual payments, consider setting up your card’s autopay to cover the minimum each month. Then, continue paying what you normally would above the minimum manually. That way, you’ll have more control over how much you pay, and since you’ll be paying the minimum automatically, you won’t rack up any late fees.
This article was written by NerdWallet and was originally published by Forbes.