LATE FEES ARE ONE

of the most frustrating features of credit card accounts. Even if you're the most diligent of consumers, chances are you've been hit with a late fee once or twice because the post office didn't deliver your check on time. Some credit-card companies even go so far as to name a particular time of the due day such as 1:00 p.m. after which the payment is late.

Fortunately, some credit card companies are starting to lighten up at least a bit on these demands.

On Tuesday, Citigroup launched the Citi Simplicity card, which waives late fees as long as you make at least one purchase during each billing period. The card is also flexible on the payment due date you can choose your billing date to be in the beginning, middle or end of the month. And in terms of perks, it lets you choose between a low APR, a cash-back rebate or a rewards program where you earn points redeemable for goodies.

Last week, American Express rolled out Clear a credit card that doesn't have any late, over-the-limit or balance transfer fees, and comes with a rewards program that automatically sends you a $25 American Express gift card each time you spend $2,500.

Neither card charges an annual fee.

Sounds great, right? Be warned: just because you won't be charged a late fee doesn't mean you won't be penalized for chronically late payments. That's because most credit card companies these two included trigger their so-called default rates if you fail to make an on-time payment more than once or twice in any six- or 12-month period. These penalty rates can run higher than 30% annually. (The exact terms of the default rate are specified in your card's terms and conditions statement.)

For more on that, click here

"[Eliminating late fees] is a step in the right direction, but obviously the credit card companies haven't gone far enough to address these exorbitant penalty-pricing practices," says Curtis Arnold, founder of CardRatings.com, a credit card information web site. Of course, if you never carry a balance, this won't matter much.

If you're the type who occasionally makes a payment a day or two late, these cards will spare you the fee. But you shouldn't consider them a free ride. Here are the details of the two offers.

The Citi Simplicity Card

The advantages:

This credit card has no late fees, as long as you make at least one purchase each billing period. You can also set your billing due date to be in the beginning, middle or end of the month, whichever is most convenient for you.

The basics: The card comes in three different formats: a low-rate card, one with a rewards program and one that offers cash back. The low-rate card has an introductory 0% APR on purchases and balance transfers for the first 12 months, and has no balance transfer fees. After that, your APR remains a relatively low 9.99%. (That rate is variable and will change as the prime rate changes.) The Citi Simplicity rewards and cash cards let you earn points or cash back, respectively, for each dollar you spend. (For more on the ThankYou rewards program, click here For the first 12 months, you'll earn five points (or a 5% cash rebate) for each dollar spent at drugstores and gas stations and one point per dollar everywhere else. After the intro period is over, you earn at a point-per-dollar rate.

The traps: Any late payment might trigger the bank's default rate, which can be as high as 30.74%. (The default rate equals the prime rate plus an interest rate up to 23.99%. The rate added on to the prime will depend on your credit score and history with Citigroup.)

Although Citi Cards Executive Vice President Ed Eger reassured us that the default APR won't come into effect if a consumer is only three to five days late, the bank won't be so lax if late payments become habitual. You'll also trigger the default rate if you exceed your credit limit or send a check that bounces.

American Express Clear
The advantages: The card has no late fees, no over-limit fees, and no balance transfer or cash advance fees. In addition, you get one free credit report and credit score per year.

The basics: You earn one reward point for each dollar you spend. Once you accumulate 2,500 points, America Express will automatically send you a $25 AmEx gift card, which can be used at any merchant that accepts American Express. Depending on your credit history, you will also get an introductory 0% APR on purchases for the first six or 12 months, as well as a 3.99% APR on balance transfers for the life of the balance. (However, if you make a balance transfer, the standard APR for new purchases will apply. For details, see the table below.)

The traps: The default rate (the prime rate plus 21.99%, currently 28.74%) kicks in if you make two late payments during any 12-month period, and remains in effect for at least 12 billing periods.