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What is a late fee and how does it relate to the billing cycle?

Curious about credit card billing cycle

What is a late fee and how does it relate to the billing cycle?

A late fee is a penalty charged by the credit card issuer when you fail to make the minimum payment by the due date specified in your billing cycle. It is an additional charge on top of the outstanding balance you already owe.

The specific amount of the late fee can vary depending on your credit card issuer and the terms and conditions of your credit card agreement. In India, the late fee charged by credit card issuers is typically in the range of Rs. 100 to Rs. 1,000 or more.

The late fee is intended to incentivize timely payment and cover administrative costs incurred by the credit card issuer for managing late payments. It is important to note that making late payments can have negative consequences, including a negative impact on your credit score.

To avoid late fees, it is crucial to make at least the minimum payment by the due date. Setting up automatic payments or reminders can help ensure you don't miss payments. If you anticipate difficulties in making a payment, it is advisable to contact your credit card issuer as soon as possible to discuss alternative payment arrangements or seek financial assistance.

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