When calculating the finance charges on your past due credit account, you must include any late fees imposed by the lender in the balance figure used for your calculation. Most banks and financial institutions impose a late fee when your account becomes past due. This fee directly increases your finance charge by increasing the average daily balance used for the finance charge calculation.

Determine your daily balance for every day during the billing cycle. Add the daily balance figures, and divide by the number of days in the billing cycle. For example, assume your average daily balance was $1,000.

Add any late fees imposed by the lender for your past due account to your average daily balance. For example, assume the lender imposed a $50 late fee. Then you would add $1,000 and $50 to get $1,050.

Divide the annual percentage rate expressed as a percentage associated with your account by 12. This assumes that your lender uses the standard 30-day billing cycle. If your lender uses a different billing cycle, you would divide the annual percentage rate by the number of billing cycles in a calendar year. Assume the lender charges 20 percent interest, and has a 30-day billing cycle. The calculation would be 0.20/12 = .0167.

Multiply the average daily balance plus the late fees figure by the annual percentage rate, divided by the number of billing cycles figure. Continuing the same example, $1,050 x .0167 = $17.54. This figure represents the finance charge for the billing period on your past due account.

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