As you stated, if the past due amount is $500.00 and you have a sevice charge of 1.25% then this would be tha same to say that the Service charge is 1.25% of $500.00 which would equal $6.25 ($500.00 x 1.25% OR 500.00 x 0.0125).
New billing total therefore will be (500.00 * 0.0125) + 500.00
Which of course equals $506.25
Note: If doing your calculations progmaticly, make sure your variables are dim'ed as Single. For example:
Dim IntrestRate As Single
IntrestRate = 0.0125
Me.TotalDue = CCur((Me.PastDue * InterestRate) + Me.PastDue)