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How to avoid late payment penalties

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Paying bills on time is a great way to save money as it helps you to avoid fines and late payment fees. But the reality is that we often reach the month end and realise we’ve over spent on our budget and simply don’t have the money to pay bill on time.

What is a late fee?

If you’re a little late on paying the bills, some suppliers may charge you a fee for late payment. How much these penalties for late payments are usually depends on the product and how long the grace period is.

Paying bills on time not only helps you to avoid fines and fees, but could also prevent interruptions like your power or cell phone services cut off. On top of this, suppliers often charge a reconnection fee to restore power, water and gas.

Regularly missing bill payments can also affect your credit score, too. This can have a huge impact on how much it costs to get a mortgage, or borrow the money to buy a car.

So how do these late payment penalties break down?

Penalties for late payments

Each biller will have their own rules and deadlines, so check your initial contract or local state provider for exact timings. But our rough guidelines below can help you plan your budget.

Federal Tax

There are two different penalties for the late payment of tax – a charge for failing to file on time, and a fine for failing to pay.

The failure-to-file fee is 5% of the unpaid tax amount, charged for every month - or part of the month - the tax is not filed. This means if you’re even a day late, it’ll be classed as ‘part of the month’. However, the late fee is capped at 25% of the amount owed. The charge will kick in the day after the due date for tax filing.

A failure-to-pay penalty also applies, which is 0.5% of your unpaid taxes. It also accumulates for every month – or part of month - the tax isn’t paid.

If you don’t pay your taxes within 60 days, the minimum penalty you’ll face is either $135 or 100 percent of the unpaid tax, whichever is smaller.

Credit Cards

Different providers have different ways of issuing credit card late charges. Some companies set late fees for debts above and below a certain amount, For example, you may be charged more in late fees if you owe above $250 than if you owed $249.

Other credit card companies charge the same fixed fee no matter what you owe. But no company is allowed to charge more than the unpaid balance in late fees.

Credit card late fees are charged each time you miss the payment. To avoid these charges we recommend making an extra effort to pay your credit card before the due date. Even if you plan to do it in time, payments may take a couple of days to process and you may still be charged if the payment isn’t processed in time. You can pay your credit card bills at Money Services, with some billers offering a same day payment option.


When you signed your mortgage agreement you’ll have been made aware of the mortgage late fees. Most mortgage providers do allow a few days’ grace, so you can make your mortgage payment without being charged. But after this time you will receive a late fee and probably be asked to ensure it’s paid the next time round.

You can check for mortgage late fees by state, as the local laws determine how much the charges are. The amount charged should also be specified on page 4 of your Closing Disclosure – or page 3 of the Loan Estimate if you’re currently applying for a mortgage.

For rent, check your lease or rental agreement. The level of late fees should have been laid out when you signed it. Each state has different rules on what is classed as late and how much the fees are. But the fee should not kick in immediately and should only be a certain percentage of the rent owed.


There are thousands of utility companies supplying gas, water, electric and cable services like TV and internet to homes throughout the U.S.

If you make a late bill payment, you don’t need to worry about an immediate cut off. You may be charged a late fee by the company providing your telephone or cable services, usually a fixed amount that’s not determined by how much you owe. The supplier may ask you to contact them to discuss the fee and when you can expect to pay what you owe.

For water, gas and electricity, you have certain rights that say you can’t be shut off immediately. If you’re in a position where you know you will fall behind on a utility bill payment, always contact your supplier, explain your position and when you think you can pay. The supplier should try to accommodate you. This could include paying late fees or bills over a number of months.

How to make same day bill payments

So that you can be sure of making your payments before they are due, visit your local Money Services.

We offer a same-day bill payment service on many bills to ensure your bills get paid on time. And if we don’t offer same day service we have a variety of other delivery times like next business day or 2-3 business day.

Find your local store by using our handy store locator tool.

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