Late Payment Cost Calculator

The two parts of the cost

Card issuers typically charge a flat late fee — often around $40 — and then raise the APR on the balance to a penalty rate, usually about 29.99%, for a set period. The fee is a one-off; the penalty rate is a monthly charge applied to everything you still owe.

So the real cost is the fee plus the gap between your regular interest and the penalty interest over however long the higher rate stays on. On a $5,000 balance, the difference between 22.5% and 29.99% is roughly $31 of extra interest in the first month alone — on top of the $40 fee.

Why the interest part grows so fast

The penalty rate applies to the entire balance, every month it is in force. One month at the penalty rate is only a few dollars of extra interest, but leave it on for six or twelve months and the gap widens steadily — while the balance is also still accruing at the higher rate the whole time.

The page shows the two rates side by side for 1, 3, 6 and 12 months so the growth is visible, not abstract. The fee is fixed; only the extra interest scales with time.

Where the window ends

The months field is how long the penalty APR stays on, and the page prices exactly that window: the one-time fee plus the extra interest for those months, then it stops. It does not model what the higher-rate balance costs after the window closes, nor interest charged on the fee itself — those are separate and would only add to the total.

That makes the months field the most important knob on the page. If your issuer says the penalty lasts until a number of on-time payments instead of a set term, use your own best estimate of how many months that will take and re-run — the shape of the answer, fee first and interest growing behind it, stays the same.

A clean model, on purpose

The penalty rate is applied to the starting balance as simple monthly interest for the window — there is no compounding inside it, and the fee does not earn interest. That keeps the number clean and easy to verify: a month at the penalty rate is the rate gap over 12 months, applied once to the balance, not a snowball.

A real card that compounded daily would show a little more extra interest over the same window, and a card that charged interest on the fee would show more still. The page deliberately does not model those, so the estimate is on the conservative side and the fee-versus-interest shape is never buried in compounding detail.

The cheapest fix is time, not a better card

The two inputs behave in opposite ways. The fee is charged once, so its cost is settled the moment the payment is late: $40 is $40 whether the penalty stays for one month or twelve. The extra interest is a rate applied to the whole balance for as long as the penalty lasts, which at a seven-point bump on a $5,000 balance is about $31 a month - and it is the only part of the bill that keeps growing while you decide what to do.

So the cheapest response is rarely a balance transfer or a new card; it is shortening the window. Paying the balance down ends the interest part immediately, because a rate applied to nothing costs nothing, and most issuers restore the regular rate after a run of on-time payments rather than on a fixed date. In this model that is the months field: set it to the number of statements you expect the penalty to sit on, then watch the total collapse as it goes to one. A $40 fee plus one month of interest is a very different number from the same fee plus a year of it.

What the page does not price, and says so: the credit-report mark itself, a repricing of your other cards if the issuer extends it, and the phone call that sometimes gets the fee waived. Those are real costs, but they are not arithmetic, so they stay named instead of being folded into the headline as if they were.