Can a Collection Agency Charge More Than the Original Debt?

A lady, facing away from the camera, sitting on a boat floating in clear blue water surrounded by 5 other boats and the mountain
Dear Experian,

If a checking account was closed, charged off, and sold to a collections agency, what kind of interest can they charge on that debt? I read that it can't be more interest than was part of your contract with the original creditor. Can the collection agency charge monthly fees for every month they have had the debt? Are there state limits on this interest?


Dear ANK,

When a creditor sells a past due debt to a collection agency, the collection agency becomes the owner of debt. They may add additional interest and fees to the balance as part of their collection efforts, so the collection amount may be greater than the original amount that was written off by your creditor.

Both state laws and federal laws like the Fair Debt Collections Practices Act (FDCPA) regulate the fees a collection agency can charge. Often, the amount of interest is dictated by the interest rate listed in the terms and conditions of the original contract.

If you disagree with the amount a debt collector says you owe, contact them for clarification. If you believe with a collection agency is not complying with the law, contact your state attorney general's office for information about your legal options.

Thanks for asking,
The "Ask Experian" Team

The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. By sharing your questions and our answers, we can help others as well.

Personal credit report disputes cannot be submitted through Ask Experian. To dispute information in your personal credit report, simply follow the instructions provided with it. Your personal credit report includes appropriate contact information including a website address, toll-free telephone number and mailing address.

To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through April 2022 at AnnualCreditReport.