A late fee is a charge imposed when a payment is not made by its due date. This fee serves as a penalty for the delay and encourages timely payments. Late fees are commonly associated with bills, loans, and credit cards, and they can vary in amount depending on the terms set by the service provider or lender. Typically, late fees are calculated as a fixed amount or a percentage of the overdue payment. For example, a credit card company may charge a late fee of $25 if the payment is not received by the due date. Understanding late fees can help individuals manage their finances and avoid unnecessary charges.