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Fatwa CenterCharging late fees
Question
Is charging late fees considered Riba?
Answer
All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad 
is His slave and Messenger.
Paying late fees when paying the debt that is due is pure Riba (interest and/or usury) and it is Islamically forbidden. It is the type of Riba used by the Arabs in the pre-Islamic era of ignorance. The creditor amongst them would say to the debtor: "Either you pay or you pay interest." Thus, paying late fees is Riba.
Allah knows best.
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