Late fees: How much they’ll cost you and tips to avoid them

Regularly running late paying your bills? It’s a habit that could be costing you big time with some companies charging late fees as high as $50. We look at what you can expect to pay if you’re late and offer tips to avoid being stung.

With our busy schedules, it can be hard to keep track of when a particular bill is due or remember that you have a library book that you need to return. But your forgetfulness could end up costing you.

“Paying your bills late can negatively impact your finances in all sorts of ways. For starters, you could be charged interest and late fees,” pointed out Canstar’s editor-at-large, Effie Zahos. “If you leave it too long you can lose access to services and it may affect your ability to get credit in the future if late payments for loans, credit cards, or your mortgage are recorded on your credit report.”

So how much could you be looking at? Not all service providers charge a late fee but Canstar has crunched the numbers for those that do. Check out the potential late fees for a bunch of everyday household bills to see just how quickly the tardy tax can add up.

Late payment fees on various types of products and services

Home loans

Mortgage repayment missing in action? Some lenders charge up to $50 for an overdue home loan repayment. The minimum late fee is $10 and the average is $25.

Some lenders may give a few days’ grace so the late fee may not kick in until your payment is overdue by five days.

“If you’re late paying your home loan repayment by more than 14 days, it may be listed on your credit report as a late payment in your repayment history information,” warned Ms Zahos.

Credit cards

Missing the monthly minimum repayment on your credit card will lead to mounting interest charges. It’s also likely you’ll get slapped with a late fee. The average late fee charged is $19 and they range from $5 to $30.

“It might sound strange but you also have to be careful not to make a payment too early,” said Ms Zahos. “Generally, for a payment to count towards the specified minimum repayment amount it needs to be made after the statement is issued. So, in theory, even if you made a payment before your statement was issued, if you don’t make another payment by the due date you could be hit with a late fee.”

Buy now pay later

Some buy now pay later providers (BNPL) don’t charge a late fee. Others hit late-payers with a fee of up to $10. The average is $6.

“Something else to watch out for is being hit with another fee if you don’t ‘catch up’ with the missed repayment in a certain time period,” warned Ms Zahos. “Afterpay, for example, will charge an initial late fee of $10 but if the payment remains unpaid seven days after the due date you’ll be charged a further $7.”

Electricity

Being overdue on your electricity account could ultimately leave you in the dark. Electricity providers can zap late-paying customers with a late fee ranging from $12 to $16. On average it’s $14.

“If you are on an energy plan with a ‘pay on time’ discount it’s even more important to make sure you pay by the due date because not only might you be hit with a late fee but you will miss out on the savings that come with paying on time,” said Ms Zahos. According to Canstar Blue, pay on time discounts generally range from 5% to 30%, so it could even end up costing you even more than the late fee.

NBN plans

NBN payment slipped your mind? Some providers won’t let you forget it. They charge a late fee of up to $22, with the average being $14 and the lowest $10.

Mobile plans

If you overlook the due date for your mobile bill you can expect to pay a late fee of $13 on average, with late fees ranging from $5 to $22.

Late fees

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Source: www.canstar.com.au, www.canstarblue.com.au – 15/06/2022. Averages based on a sample of products on Canstar’s database. Electricity fees based on providers in metro NSW. Mobile fees based on providers of post-paid plans. Minimum and average fees based on providers that charge a fee, excluding BNPL which includes those that do not charge a fee. Numbers have been rounded to whole dollars.

Library fines

While some libraries have scrapped fees for overdue items, others make you pay. Sydney’s Inner West Council, for instance, charges an initial fine of 70 cents when an item is three days late. Then there will be a subsequent fine of 30 cents per day up to a maximum of 60 days. If your item is more than 60 days overdue, you’ll be hit with the full replacement cost plus processing fees. So, if you’re 14 days late that will set you back $4.

Tax

Let your tax return slide beyond the due date? You could be slapped with a failure to lodge penalty. The standard penalty is $222 for every 28-day period or part thereof that the return is outstanding. The penalty is capped at $1,110.

If you take too long to get your act together the Australian Tax Office (ATO) could even prosecute you for not lodging your return.

The ATO may also charge interest if you pay your taxes late or if there is an unpaid tax debt. The annual General Interest Charge (GIC) is reviewed quarterly. For April to June 2022, the GIC is 7.07%.

Road tolls

Travelling toll roads in NSW, Queensland and Victoria without a tag, pass, or with a non-tag account could drive your dollars lower if you don’t take steps to pay the toll.

For example, in Melbourne Linkt allows five days to pay your tolls. If you don’t, you’ll receive an invoice to pay your tolls plus a $13.54 fee. You have 16 days to pay the invoice.

Let that one slide and you’ll receive a final invoice for your tolls plus a $26.42 fee. You have another 16 days to get it sorted.

If you don’t pay the final invoice you can expect Linkt to contact you and possibly involve debt collection agencies. Ignore that communication from Linkt and things could escalate through a series of increasingly expensive penalties up to an enforcement warrant with a $382.82 charge. And Fines Victoria and the courts can become involved if the penalties still go unpaid.

Traffic infringements

Let’s say you play fast and loose with the road rules and stop in a no-stopping zone. In Victoria, you can be slapped with an infringement penalty of $182. If you fail to pay the penalty by the due date you’ll be issued with a penalty reminder notice and a fee of $26.60 will be added to your fine.

Fail to pay the penalty reminder notice within 14 days and a notice of final demand will be issued, charging an additional $137.80. That means the total late fee will climb to $164.40.

Failure to comply within 21 days and you can be hit with an enforcement warrant and an additional fee of $60.20 will raise the total late fees to $224.60.

In Queensland stopping in a signed no-stopping zone may result in a traffic infringement penalty notice. In Brisbane City Council, for instance, the fine would be $275 and you’d have 28 days to pay it. If you fail to pay on time or make a payment arrangement you will receive a reminder notice and another 28 days to pay and be charged a registration search fee of $11.40.

If you still don’t comply it can be referred to the State Penalties Enforcement Registry and an enforcement order would be issued. The order would include a registration fee of $73.80 and a new due date.

Tips to help you avoid late fees

Automate your payments

Paying by direct debit or direct credit is a failsafe way to pay bills on time.

Set a reminder

Plug bill due dates into your calendar. “You could also use a free app such as GetReminded,” suggested Ms Zahos. “It can be particularly handy if you’re juggling several credit cards or you tend to forget about quarterly or annual bills until it’s too late.”

Fight the fees

“You can dispute a late fee. Just be prepared to argue your case,” said Ms Zahos. “If you’re a first-time offender then the provider might be willing to reverse the charge.”

For financial products, if you’ve challenged the fee and are not happy with the result, you could try contacting the Australian Financial Complaints Authority (AFCA).

As for the ATO, it may agree to a full or partial remit of its interest charges on a tax debt if there are extenuating circumstances. For instance, if you’ve been impacted by a natural disaster or the payment of the full amount of interest would result in serious financial hardship.

Make an arrangement

Paying your bills late because of financial hardship? “It’s best to be proactive. Contact your provider and ask for an extension or discuss making a payment arrangement,” suggested Ms Zahos.

Keep in mind that from 1 July if you enter a financial hardship arrangement it will be flagged on your credit report.

“If you make a payment arrangement it’s important to stick to it. Your electricity provider can’t cut off your power if you keep up the payments under a hardship arrangement, but if you let them slide you can end up with no power.”

→ Related: How financial counsellors can help Australians in difficulty

Cover image source: Roman Samborskyi/Shutterstock.com