A "penalty" is money that you have to pay because you didn't follow a set of rules, or because you did something wrong. When a company "charges" you a penalty, it means that they make you pay it.

Here are some reasons that you might be charged a penalty:

• If you spend more money with your debit card than you actually have in your account, your bank will charge you a penalty.
• If you are late sending a payment (like in the example above), you will be charged a penalty.
• If you sign a two-year contract with a mobile phone company, and then want to change your service to another company after one year, they will charge you a penalty.

The word "penalty" isn't usually used for talking about money you're forced to pay by the police or by a judge. That's called a "fine".