Page 1 of 2
If there's one group of entities that you want to pay on time, it has to be federal, local and state governments. From city hall all the way up to the IRS, governments exert the power of their monopolistic franchise and penalize those who can't pay on time with exorbitant late fees. With penalty rates that can approach 1,000% annualized for being late, governments make the credit card companies look like charities. If you are deciding which bills to pay first this month, make sure that your government bills are at the top of the list.
Here are some of the most common egregious government late fees:
Property taxes are typically levied by your county in one or two installments each year. Miss the deadline by a day and you could get a nasty 10% penalty in some places. That's the way they do it in Los Angeles, the largest county in the country. With a 40 day grace period, it works out to a 139% annualized interest rate. If you are really late in a place like York County, South Carolina you'll get a 15% penalty. Some other counties are more reasonable and charge a seven to ten percent annualized interest rate based on the number of days that you pay late. Word to the wise: pay your property taxes on time.
Property taxes are considered secured first lien obligations - ahead of your mortgage. That means they can take your house away for nonpayment. If you're late on your property taxes, expect a call from your mortgage company.
If you are moving to a new state, you better register your vehicle fast. While many of your friends may flaunt the fact that they have been bucking the system by keeping their low cost Oregon registration while driving around San Francisco for the last two years, they'll pay a hefty penalty for registering late. In California, registering just 41 days after you arrive will add a 60% surcharge to the registration rate. But new arrivals aren't the only victims. If you pay your registration fees 1 day late, you'll have to cough up a 20% plus surcharge. If you show up 10 days later, look for another 15% tacked on for good measure. In Colorado, they just increased the maximum late fee from $10 to $100 which should generate a $13 million windfall for the state.
Although it's not as much money, parking tickets are far more egregious with their penalties. Many cities require payment within 21 days or assess fines that can approach 100%. In the City of Baltimore, the fight over parking ticket fees is a hot issue. The City charges a $16 monthly late fee. The most common parking ticket in the city is $23 for parking at a meter that has run out. If that parking ticket gets blown off your window or you just forget to pay, you'll be saddled with a 665% fine, a figure that would make a loan shark cry with envy.