Unless you’ve had to fork out cash for them in the last few years, it may come as a surprise that credit card late fees have been bumped up since 2016, with some now reaching as high as $40. That’s got to hurt!
Mozo’s review of 225 credit cards found a number of cards have increased late fees by up to a mammoth 200%, with rises from this month alone ranging from $10 to $30.
It follows after the High Court in 2016 gave it the all-clear for lenders to charge up to $35 for Aussie’s who miss a credit card repayment, prompting lenders to hike late fees soon after.
“When it comes to credit cards, if you are not in the habit of paying on time each month it’s worth checking your statement to see what fee you’re being hit with. If you don’t like the fee you see it might be time to switch cards,” Mozo Director Kirsty Lamont said.
And with the average late fee now clocking in at $18.50, she encourages people to double check what kind of fees are in place for their own credit cards.
“With some card companies happy to charge $0 it’s clear not all fees structures are the same across the credit card market so it pays to compare.”
And it’s not just your hip pocket that could feel the pain of missed credit card repayments. With the introduction of Comprehensive Credit Reporting, lenders have a more thorough view of an applicant’s financial situation, so it’s important to be aware of your own repayment behaviour and how it could affect your credit health.
Geri Cremin, Credit Reporting expert from CreditSmart.org.au, said a ding like this on your credit report can ultimately affect the next time you seek credit, whether it be when you apply for a home loan, personal loan or a credit card. But that doesn’t mean it’s all doom and gloom.
“If you’re diligent in making your repayments on time, you can improve your credit health,” she said. “Good credit health will help you borrow money more easily when you need it, and perhaps at a better interest rate than before.”
But it’s not just credit cards that look to cash in on late fees, here’s what Mozo found after extending the search to 445 electricity contracts and 206 personal loans:
|Product||Late Fee |
|Credit Card||$0- $40||$18.50|
If you’re paying up to $50 in late fees for any of these products, then avoiding those fees could be as easy as getting organised, start by taking note of when your bills are due and making a conscious effort to pay them on time.
But if you find yourself constantly shelling out cash despite your best efforts, then get in touch with the company to see if you can access a hardship program or consider switching to one of the many products that don’t charge late fees by comparing some of the best credit card deals in Australia.
Some credit cards with no annual fees - last updated November 28, 2020
American Express Qantas Discovery Card
American Express Qantas Discovery CardDetails
Bankwest Zero Platinum Mastercard
Bankwest Zero Platinum MastercardDetails
St.George No Annual Fee
St.George No Annual FeeDetails
American Express Velocity Escape Card
American Express Velocity Escape CardDetails
BankSA No Annual Fee
BankSA No Annual FeeDetails
^See information about the Mozo Experts Choice Credit Cards Awards
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