1. What is Credit Card Late Payment Interest?

Credit card late payment interest is the penalty interest charged when you fail to make at least the minimum payment by the due date. This is calculated using your penalty APR on the unpaid balance.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( I \) — Interest charged (currency)
• \( P \) — Unpaid balance (currency)
• \( R_{lp} \) — Monthly late payment interest rate (Penalty APR / 12)

Explanation: The calculator converts your annual penalty APR to a monthly rate, then applies it to your unpaid balance to determine the interest charge.

3. Importance of Calculating Late Payment Interest

Details: Understanding late payment interest helps consumers appreciate the true cost of missing payments and encourages timely payments to avoid penalty APRs that can remain in effect for 6 months or more.

4. Using the Calculator

Tips: Enter your unpaid balance in dollars and your penalty APR as a percentage. The penalty APR is typically much higher than your regular APR (often 29.99% or more).

5. Frequently Asked Questions (FAQ)

Q1: How long does the penalty APR last?
A: Typically 6 months, but you must make on-time payments during this period to have it removed.

Q2: Does this affect my credit score?
A: Yes, late payments can significantly impact your credit score and remain on your report for 7 years.

Q3: Can I avoid late payment interest?
A: Most issuers won't charge interest if you pay at least the minimum by the due date.

Q4: Is there a maximum late fee?
A: Yes, federal rules cap late fees (currently $30 for first offense, $41 for subsequent offenses within 6 months).

Q5: Does this include the late fee?
A: No, this calculates only the interest. Late fees are typically $25-$40 in addition to any interest.