Have you ever made a small mistake with your credit card, for example, being late on a $20.00 minimum payment, and then to make matters worse the bank hits you with a $39.00 late fee?

Excessive late fees have long been a common consumer complaint. But on Wednesday of this week, the Federal Reserve proposed stricter restrictions on the penalty fees that a credit card issuer can charge. One of the most significant changes would be to prohibit the companies from exacting a penalty charge that is larger than the violation.

So if you happen to stop by that fancy coffee shop and purchase a $4.00 cup of coffee (yep, something luscious and decadent…..and pricey!) and you use your credit card and it just happens to put you over the limit, you won’t be paying $40.00 for the privilege of drinking that delicious coffee but it may end up costing you twice as much–$8.00.

Of course, it is best to avoid late fees altogether, but with these proposed regulations the late fee should be “reasonable and proportional” as per the Fed’s definition.

Read “Fed proposes limits on credit card penalty fees” at the Washington Post.

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