Late Payment Fee - Penalty charge or recovery of costs

ccmug

As on many previous occasions I was late paying last month's Capital One monthly repayment. Usually this may only be by a day or two (I'm self-employed and money isn't always there when required) and I incur the £12 late payment fee. This month I was 3 weeks late and got a call from the collections department. I now had the funds and told them I would make the payment that evening by internet banking. I was told that if I made the payment by debit card there and then, they would refund the late payment fee. As they had put more effort into recovering the payment and presumably incurred a debit card processing charge then surely they had more justification for making the charge than they would have if it had just been printed on the next statement.

To me this indicates the late payment fee is a penalty fine and not recovery of justifiable costs

I'd love your comments

CannyJock

Set up a direct debit to make sure that you repay at least the minimum and arrange an overdraft with your bank to cover the lean months would be main comment

I've no doubt that it's disproportionate to their costs though.

ccmug

CannyJock wrote: »

Set up a direct debit to make sure that you repay at least the minimum and arrange an overdraft with your bank to cover the lean months would be main comment

I've no doubt that it's disproportionate to their costs though.

Thats not really very helpful, if Natwest decline the direct debit through lack of funds they charge another £38. Besides that was not the question.

jonesMUFCforever

Whilst it could be either of what the OP suggested it has been made clear that the £12 is fair.
It used to be more such as £25 or £30!

exel1966

£12 Fine/Fee/Charge/Penalty/Excess, call it what you like, the fact remains, it's been officially declared fair and just ! What would you think a fair amount is ?

You've been advised of ways to avoid it !

CannyJock

ccmug wrote: »

Thats not really very helpful, if Natwest decline the direct debit through lack of funds they charge another £38. Besides that was not the question.

That's even more reason to arrange an overdraft with them, if because of circumstances you're being charged £ 38 then an overdraft facility, even one you have to pay for could be a good idea.

I know you're looking for some backup on these fees being out of order, and like I said I've no doubt they're disproportionate to their costs, but at the end of the day if you can do something to mitigate your losses then that's where the smart money would be.

And your OP didn't actually ask any questions, it just posed a few statements asking for a response.

Mickey_Monk

exel1966 wrote: »

£12 Fine/Fee/Charge/Penalty/Excess, call it what you like, the fact remains, it's been officially declared fair and just !

Who says the £12 fee is fair?

The OFT in their 2006 statement don't

quote
“The OFT is not proposing that default fees should be equivalent to the threshold” also “A default charge is not fair simply because it is at or below £12, that is for a court to decide”.

MarkyMarkD

Yes, but the OFT have said that they won't take any action against charges of £12 or below, which is tantamount to the same thing.

Whilst they didn't intend the entire industry to level down fees to £12, that's precisely what has happened - and not surprisingly.

Mickey_Monk

MarkyMarkD wrote: »

Yes, but the OFT have said that they won't take any action against charges of £12 or below, which is tantamount to the same thing.

No but you can take action.

Requesting they refund the penalty charges unless they can demonstrate they are proportional to their incurred costs.
Ultimately commencing a County Court claim if they don't play ball.

BTW I have done this successfully with GE Money and The Post Office for £12 late payment fees. They both caved in before it reached court.

ccmug

Everyone seems to have missed the point of the OP. The real question is why they can refund the late payment fee, without being asked, when they have phoned you to get you to make the payment - (first cost to them), and only if you pay by debit card over the phone - (second cost to them), rather than by means of a BACS transfer.

I already have an overdraft facility and as I stated in the OP unlike salaried workers as a self employed person you cannot guarantee when your money is going to come in or as is the case at the moment whether you actually have any work to generate the income.

I'm not arguing as to the fairness of the amount but the principle of its application. So in future if I need to pay Cap One late I'll ring up and pay by debit card and demand they remove the late charge because they did so before and therefore set a precedent

MarkyMarkD

They haven't set a precedent by refunding a charge once, on a discretionary basis. They've exercised discretion. Most card companies will tell you when they waive a late fee once that it is a one-off ex gratia waiver and that's it - you will have to pay it in future.