Can a retail business charge a late fee on a late fee?
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Can a retail business charge a late fee on a late fee?
I paid off an account but sent the last payment late, so they sent me an additional charge of $10 which I paid it but, they state it was sent late so now they adding another $10 late fee for the late fee being late. Is this legal?
Asked on October 22, 2010 under Bankruptcy Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
It depends on what the terms where when you opened the account. If the account stated that any amounts due would be added to the principal balance, for example, and that late fees or interest accrue on any amounts which are overdue, then yes, they could do this. It would be similar to a credit card; you pay interest (including, as applicable, interest at a highter rate if you are late in paying) on the principal; but whenever you don't pay the entire amount due, any amount remaining, even if it was interest, is added to the next month's balance and will accrue interest and fees. So as long as the terms of the account stated that the retailer may do this, they can; however, they cannot arbitrarily change the terms of the account to charge you more than you had agreed to in opening the account.
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