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> Late fees create a predictable minimum payment that credit card companies can account for and create incentives for consumers to keep spending more under cont
by wolpoli 3y ago
> Late fees create a predictable minimum payment that credit card companies can account for and create incentives for consumers to keep spending more under control. Consumers may not realize or care how much their total debt is growing if they could charge their CC without having to pay a certain amount relative to the total debt.
You just described minimum payment, which is separate from late fee.
- _heimdall 3y agoThey can't charge late fees without minimum payments. What would be late exactly if a payment wasn't required?
- zamadatix 3y agoGP is saying "minimum payments + interest already do the things you list as needing late fees for" not "there should be no minimum payments". I.e. regardless if there are late fees or not: you can't be delinquent on any debt, regardless of label, indefinitely. Also regardless if there are late fees or not: the amount you're delinquent will already increase exponentially more than just the sum of the minimum payments you missed because of interest.
- wolpoli 3y agoAnd if the borrower does not pay the minimum monthly payment (% of outstanding balance) several months in a row, that is already sufficient signal to the bank to take further actions, such as sending reminder letters or locking the card. Late fee is not needed for that function.
- the_svd_doctor 3y agoIf there is no minimum payment then, by definition, there can't be any late fee since you're never late and can simply not pay forever without being delinquent.
- ThunderSizzle 3y agoYou basically just described medical billing. They claim bills are due upon receipt, and then can't consider them delinquent as long as there was action made within a year from my understanding.