Generally speaking, when we use a credit card, if we do not pay back the money on the repayment date, it will be overdue. So what is the difference between late payment fees and liquidated damages on credit cards?

1. Differences in definitions:

Late payment penalty: It is a type of administrative penalty and has a strong administrative coercive flavor.

Liquidated damages: It is a form of civil liability between equal parties. Both parties can decide the rules for collecting liquidated damages, but liquidated damages generally have an upper limit.

2. Fee standards:

Late payment fee: The proportion of late payment fee is uniformly stipulated by the People's Bank of China, and is generally charged at 5% of the unpaid portion of the minimum repayment amount.

Liquidated damages: The amount of liquidated damages is determined by each major bank, but the charging standards of major banks are basically set at 5% of the unpaid minimum repayment amount.

3. Collection method:

Late payment fees: Compound interest is compounded every month, and it will get bigger and bigger. The later you pay, the more late payment fees you need to pay.

Liquidated damages: Liquidated damages are collected directly in one lump sum, without monthly compound interest, and there is an upper limit.

So when you use a credit card, you must repay it on time, because there are handling fees for both late payment fees and liquidated damages, so you must maintain good card usage habits.