What term refers to charges assessed due to late payments?

The term that best fits the description of charges assessed due to late payments is interest on overdue accounts. This terminology specifically refers to the additional costs that accrue on a principal amount when payments are not made by the agreed deadlines. Interest serves as a form of compensation for the lender or service provider for the delay in receiving their payment, reflecting both the time value of money and the financial risk associated with delayed payments.

In a contractual context, when payments are not made on time, interest on overdue accounts is often predefined as part of the terms of service or credit agreements. This interest accumulates over time, providing a clear financial incentive for timely payments and compensating the creditor for the ongoing exposure to risk of non-payment.

Other choices, while related, do not precisely capture the nature of the charges. Penalties for late payments may refer to a fixed charge rather than an accruing interest rate. Charges for overdue accounts could encompass a broader range of fees, not specifically tied to interest. Late fee assessments might also imply a one-time charge rather than an ongoing accumulation of interest. Thus, interest on overdue accounts accurately defines the concept of recurring charges that arise from late payments.