What is a late fee?

If you've mishandled your credit card bills, you've probably been hit with a sizable fee for missing your payment deadline.

The reason a late fee can be such a big problem is that it adds money to the amount you owe, on what might already be a large balance, meaning that the value of each subsequent payment will be reduced. Now, the good news is that most late fees are only about $30-$40, but they can add up quickly for people who habitually miss deadlines, even if it's through no fault of their own.

In addition, you'll probably also be hit with a penalty interest rate on whatever part of the minimum balance you didn't cover on that late payment, meaning that the cost of that debt will grow more quickly than normal until it's paid off.

So even if you think it won't be a big deal to send in payment a week or a month late, it could cost you significantly.