Credit card fees can be frustrating, especially when they seem to appear out of nowhere. One concerned customer, Amanda, asked if it was normal for a bank to charge an unexpected $100 finance fee after a missed payment. Amanda was frustrated that she wasn’t given prior notice that the missed payment fee would be added to her billing statement. 

 

Well, this is a standard practice in the financial world. And unfortunately, not everybody understands how a single missed or returned payment can impact your credit card bills. For this reason we’re going to break down the legality of credit card fees and finance charges, the stakes of missing payments, and some ways to avoid digging yourself into a hole that you may have a hard time getting out of. 

 

Understanding Credit Card Late Fees and Finance Charges

If you’ve ever missed a credit card payment, you’ve likely encountered some form of penalty. In March 2024, the Consumer Financial Protection Bureau (CFPB) introduced a rule capping credit card late fees at $8, down from the previous $30-$41 range. The CFPB cautions that if the rule isn’t implemented, consumers could end up paying over $56 billion in credit card fees over the next five years. 

 

However this rule faced immediate legal challenges from the U.S. Chamber of Commerce, the American Bankers Association, and other trade groups.  These challenges led to a federal court injunction in May 2024, which was upheld by a federal judge in December 2024. As of early 2025, the rule remains unenforced, and banks continue to charge late fees under the previous guidelines.

 

Here’s what you need to know about finance charges in 2025:

  • Late fees: Since the CFPB’s rule is in limbo, credit card companies are legally allowed to charge up to 100% of a missed minimum payment – meaning, yes, you have to make your minimum payment twice to make up for one missed payment. And yes, the fees accrue with each missed payment, leading to substantial additional costs over time.
  • Finance charges: If you don’t pay at least the minimum balance, interest continues to accrue on your unpaid balance based on your credit card’s Annual Percentage Rate (APR). The Truth in Lending Act confirms that finance charges, including interest and late fees, apply when a cardholder fails to meet the minimum payment requirement
  • Penalty APRs: Some cards may increase your interest rate significantly if you miss even one payment. For example, American Express will increase your APR by 26.74% for a minimum of 6 months. If that makes you cringe, you won’t like this either: a missed payment on a  Citi Bank credit card will increase your APR up to 29.99%, and it will apply indefinitely. 

If you’re ever unsure about why a charge appeared on your bill, the first step is to check your cardholder agreement. This document, typically available on your bank’s website, outlines all fees and penalties associated with your card.

 

Can Banks Charge Fees Without Notice?

One of Amanda’s concerns was that she didn’t receive any notice about the $100 charge. While it might feel unfair, banks are not always required to send special notifications for fees already disclosed in the credit card agreement. However, they are legally required to inform customers of significant changes, such as interest rate hikes.

 

Many banks send reminders via email, text, or app notifications when a payment is due. If you aren’t receiving these alerts, consider adjusting your communication preferences with your bank to avoid future surprises.

 

Should You Cancel Your Credit Card Over Fees?

It’s a valid feeling to want to cancel your credit card when you’re hit with an unexpected charge, especially one that you’re not prepared to pay.  And though this might seem like a logical response, there are a few ways closing a credit card can harm your credit score.

 

Here’s why:

  • Credit history length matters: A significant portion of your credit score is based on the age of your credit accounts. Keeping older accounts open benefits your score.
  • Credit utilization ratio: This is the amount of credit you’re using compared to your total available credit. Closing a card reduces your total credit limit, which can increase your utilization percentage and lower your score.
  • Account mix: Lenders like to see a mix of credit types, including credit cards, loans, and lines of credit. Closing an account could reduce your diversity.

A safer approach? Keep the card open, even if you don’t plan to use it often. If you’re worried about incurring additional fees, consider setting up automatic minimum payments or using the card for a small, recurring charge that you can easily pay off each month.

 

 

Practical Steps to Avoid Finance Charges

  1. Set up autopay: Ensure at least the minimum payment is deducted from your account automatically each month. 
  2. Use reminders: Many banks offer text or email notifications when your due date is approaching.
  3. Negotiate fees: If you’ve been a responsible cardholder, your bank may waive a late fee if you call and ask.
  4. Review your statements: Regularly checking your statements helps you catch unexpected charges before they snowball into bigger financial headaches.
  5. Stay updated on regulations: With the CFPB’s rule on hold, credit card issuers can still charge higher fees. Keeping an eye on consumer protection news can help you make informed financial decisions.

The Bottom Line

While a $100 finance charge may feel excessive, it’s likely within the terms of the cardholder agreement. Since the CFPB’s attempt to lower late payment penalty fees has stalled, credit card companies can still charge exorbitant fees without consequence. The best way to avoid such fees is to stay proactive—set up alerts, negotiate when possible, and keep credit accounts open even if you don’t use them regularly.

 

If you’re dealing with mounting credit card debt or unexpected fees, it may be time to seek expert financial advice. Want more consumer tips? Visit TrustDALE.com to find vetted financial professionals who can help you navigate your options.