What does this have to do with family law?
I am learning about a term called "pyramiding fees" used in context with credit card accounts and it appears applicable to this situation. Would it be legal for the lender to charge this?
You're asking us to address the legality of something of which you've heard but which you didn't explain to us. That's not really possible, but let's consider the following hypothetical: You have payments of $250 due each month on a $10k loan. The loan contract provides for interest at the rate of 18% per annum on the unpaid balance. It also provides for a $30 late fee. Finally, it provides that any payments made are applied first to any outstanding late fees, then to accrued interest, with any remainder being applied to reduce the principal balance. You make your first ten payments on time, which would leave you with a balance of a bit under $9k (we'll say $9k even to make the math easier). Each monthly payment transaction will look something like this:
<current principal balance> + (1/12 x 0.18 x <current principal balance>) - $250 = <new principal balance>
In the case of the first monthly payment, it will be: $10k + (1/12 x 0.18 x $10k = $150) - $250 = $9,900
You are late by 15 days with your 11th monthly payment. That months transaction will look like this:
$9k + $30 + (1.5/12 x 0.18 x $9k) - $250 = $8,982.50
Had you made a timely payment, the transaction would have looked like this:
$9k + (1/12 x 0.18 x $9k) - $250 = $8,885
As you can see, being late by only 15 days resulted in a your principal balance being reduced by only $17.50, whereas, had you been timely, it would have been reduced by $135.
Maybe that illustrates what you're talking about. If not, please clarify what you're talking about.