Late-payment costs are a required information category
Late-payment terms are not minor account-servicing details to be supplied only after a consumer misses an instalment. Under Article 5 of Directive 2008/48/EC, relevant pre-contract information includes the interest rate applicable in the case of late payments, arrangements for its adjustment and charges payable for default. Article 10 of Directive (EU) 2023/2225 also places late-payment costs and a warning about missing payments among prominent information in the revised SECCI presentation. Applicable national legislation determines the enforceable obligations. A lender should not advertise a low borrowing rate while failing to explain material default consequences before the consumer becomes bound. A disclosure review must begin by classifying the agreement and verifying the legal regime.
Specify the applicable interest and adjustment method
A statement that overdue balances may attract additional interest is not necessarily enough. The information should identify the interest rate for late payment and explain the circumstances or mechanism through which it may be adjusted, as the applicable provision requires. If the contract references a variable rate or statutory default rate, the terms need to be clear about how the amount is determined. Some products may charge no late interest but apply another default charge; others may have more than one category of cost. Avoid implying that every credit product has a standard late fee or that an institution can automatically add any rate it chooses. Pricing and collections teams should align the pre-contract text with the contractual terms actually enforceable in the jurisdiction.
Identify default charges without inventing universal caps
Credit providers should distinguish charges imposed because of non-performance from ordinary fees payable under the agreement. Where default fees may arise, describe those charges in the manner required by the relevant law and form. CCD2 Article 35 addresses arrears and forbearance and gives Member States choices concerning charges arising from default, including possible caps. It does not establish one identical euro amount for every Member State or every BNPL instalment. Country legislation, contract terms and other consumer-protection rules can limit the charge or its recoverability. Do not state that a proposed national cap is already operative. The compliance record should link each fee type to its legal basis and operative date.
Warn about consequences beyond a fee figure
CCD2 Article 10 separately addresses a warning about the consequences of missing or late payments. That warning is not replaced by listing an interest rate. Depending on the product and circumstances, non-payment can lead to collection activity, adverse credit reporting where lawful, or other contractual and legal consequences. Do not threaten remedies that the creditor does not possess or imply that every missed instalment automatically produces the most severe outcome. The warning should be accurate and comprehensible to the intended consumer. The firm should test that it appears in the correct part of the pre-contract form and is not concealed by an optional accordion, small mobile screen or misleading headline about penalty-free borrowing.
Distinguish APR treatment from default costs
The APR calculation has a different function from the late-payment disclosure. Under CCD2 Article 30, charges payable by the consumer for non-compliance with agreement commitments are excluded from the calculation of the total cost of credit used for APR. Exclusion from that formula does not mean the consumer may be left uninformed about possible default charges. An offer can therefore show an APR and separately describe late-payment interest or fees. Check that marketing teams do not claim the APR includes every possible future cost, including default. Similarly, a claim of zero interest during ordinary repayment should be reviewed against any additional costs that arise after late payment and the terms under which they apply.
Control changes through the credit lifecycle
Maintain a schedule of default interest, charges, triggering events, adjustment mechanisms, relevant national caps, contract clauses and disclosures. Test a missed-payment scenario against the actual servicing ledger and customer notices to identify contradictions. Changes to penalty pricing should prompt review of pre-contract templates and checkout statements as well as collections procedures. Complaints can reveal where consumers understood a charge differently from its description. As of 12 October 2026, CCD2 national implementing measures are generally due to apply from 20 November 2026, while existing national law must still be considered. Review national transposition and supervisory guidance before representing these provisions as a current harmonised rule. A provider should also test partial payments, payment holidays and changes of repayment date where these features are offered, because they can affect how overdue balances and any default charges are administered. These tests do not mean every case has the same statutory result. Record contractual eligibility, the national-law basis and the final consumer communication separately.
Frequently asked questions
Are missed-payment fees always included in APR?
No. CCD2 Article 30 excludes charges arising from non-compliance with agreement commitments from the APR cost calculation.
Does CCD2 set the same default-fee cap in every country?
No. Member State provisions and the agreement must be checked, including national choices under Article 35.
Does a late-payment disclosure replace a warning?
No. The revised SECCI also identifies a warning about the consequences of missed or late payments.
Primary sources
Directive (EU) 2023/2225 ↗Directive 2008/48/EC ↗Read the source in its current version. National implementing measures and product-specific applicability may require additional research.
Related research
consumer credit pre-contract information and disclosure requirements ↗