Will Post Office Cuts Cost You Credit Card Late Fees?

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The cash-strapped United States Postal Service has proposed a number of cost-cutting moves in the face of a $9 billion deficit. Two big ideas suggested by Postmaster General Patrick Donahoe are eliminating Saturday mail delivery and closing 252 mail processing facilities, which would lead to first-class mail taking longer to reach its destination. These ideas are still in the discussion stage, but if they become reality, credit card customers who depend on the mail to receive and pay their bills could be hurt.

“Everyone doesn’t have a computer, and everyone who does have a computer doesn’t believe in online bill paying,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. Cunningham says her member organizations counsel many people who either can’t afford a computer, can’t afford Internet access, or who are senior citizens unwilling or unable to navigate the technological learning curve. “Many people still prefer to write a check and mail it in,” she says.

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These people — many of whom are financially vulnerable to begin with — could be burdened further by a slower postal service, Cunningham says. Currently, the Credit CARD Act of 2009 requires issuers to give cardholders 21 days from when they mail a bill to when they require a received payment. Cunningham points out that most issuers urge people to mail their bill up to 10 days before it’s due to ensure an on-time arrival of their payment.”If this is altered in any way, consumers will be at risk of paying late every month,” she warns. If a bill doesn’t arrive until a week or more after the issuer mails it, the time crunch will be more severe.

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Even though the CARD Act doesn’t let issuers slap penalty APRs on users unless they are more than 60 days late, a late fee can be levied if a payment arrives even a single day past the due date, up to $25 for your first offense and climbing to $35 if you’re late twice in six months. What’s more, that late payment will show up on your credit report, where it will tarnish your score.

“You might think, ‘Well, it won’t be a problem. Everybody can just shift over to the Internet and avoid the mail. No, they can’t,” Cunningham says. “And they shouldn’t be forced to.”

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