What is the Maximum allowable late fee percentage a creditor can charge on an account?

Asked over 3 years ago - Escondido, CA

I just noticed on a water bill that they had a monthly late fee charge of 10%, which if compounded on the interest is about 150% annual rate.

Is this legal in CA? or not?

It seems incredibly High....

Thanks,

Mark Wheaton

Attorney answers (3)

  1. Joshua P Friedman

    Contributor Level 14

    Answered . Usury laws in California depend on the creditor and the type of debt and any contract signed. A utility bill with a 10% late fee is common.

    Disclaimer of California Attorney
    Although the above response is believed to be accurate, it should not be relied upon as any type of legal advice because the information provided is incomplete. It is intended to educate the reader and a more definite answer should be based on a consultation with a lawyer. No attorney client relation is formed with me without a written contract.

    Joshua P. Friedman
    jfriedman@jpfassociates.com
    www.losangelescollector.com

    Disclaimer of California Attorney Although the above response is believed to be accurate, it should not be... more
  2. Frank Wei-Hong Chen

    Contributor Level 20

    Answered . It is legal in California. The usury laws normally do not apply to time payment contracts such as retail installment contracts and revolving accounts because they are not generally regarded as loans.

  3. Christopher Douglas Smith

    Pro

    Contributor Level 11

    Answered . Mark - sorry, your question is one that is determined by state law, not federal law. So the answer must come from a CA attorney. I can tell you for reference purposes only that FL permits a late fee of 5%. In your case, you are probably dealling with a public utility, which will have all sorts of special rules and exemptions regarding the fees that are permissible. And since you are in CA, your state has a tendancy to codify everything, so your answer might be buried deep in a regulation or statute. Please consult a CA attorney about this, or search the laws of CA specifically.

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