If you have been late with a payment lately, you've already noticed that credit card companies have discovered a new way to generate a great deal of extra income. The average late fee today is $35.00, if you owe more than $1000. Since the national average for American families is $8,000 of credit card debt, that represents a sizable pool of potential income for creditors, and they're going after it aggressively.

In fact, latest income figures show that some 25 percent of all income derived by credit card companies is generated by late payment fees. When you factor in penalties for exceeding credit limits, that percentage jumps to 33. That means that 1/3 of all the income generated by credit card companies comes strictly from penalizing cardholders for spending too much or not paying on time. In 1995, income from penalty fees accounted for only 18 percent of the companies' profits. The new figures represent almost a doubling of that income - a startling revelation. There is another figure that doesn't show up in those numbers. If you're late with a payment, especially if it's during a promotional period of low interest, your interest rate could skyrocket. For example, I recently received an offer from a credit card company that offered a six-month rate of zero percent to new customers. That sounded great, until I looked at the fine print. If I was late once during that promotional period, my interest rate would have jumped from the usual 13 percent to 23 percent. (Of course, I also would have had to pay a $39.00 late fee.) That was bad enough, but if I had been late a second time, my interest rate would have soared to a staggering 29 percent! (And another $39.00 late fee.)

Does that sound outrageous? It does, but it's not unusual in today's credit card world. For example, back in 1988, only about 47 percent of credit card companies would have raised a customer's interest rate if they paid late. Today, that number has risen to some 76 percent! That means it's more difficult now to find a company that WON'T raise your rates. And that trend isn't likely to change in the near future, because it's a way for credit card companies to generate huge profits.

So if you carry a credit card debt, it will pay you, in more ways than one, to make your credit card payments on time. If you don't, you could find yourself seriously in the red, for a long time to come. Copyright Jeanette J. Fisher