The Commerce Commission has written to a number of banks and credit card companies advising them not to charge more than $15 if customers pay late.
The commission has been investigating late payment fees and over the limit fees charged on credit card transactions by the main trading banks, The Warehouse Financial Services Ltd and American Express International.
Until 2009, credit card issuers were charging late payment fees ranging from $20 to $25, which the commission says were unjustified.
Some of the banks voluntarily dropped their fees to less than $15 last year.
Banks that continue to charge late payment fees in excess of $15 could face further investigation and penalties including fines.
The commission's investigation into fees for exceeding an agreed credit limit is continuing.
A class action suit across the Tasman alleges Australians were illegally charged up to $5 billion in fees, and lawyers in New Zealand are also considering legal action.
A commission spokesperson, Graham Gill, says companies are not allowed to make a profit from the fees or use them to recover bad debt.