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Late Payment Interest in California (2026)

10% per year — California Civil Code §3289(b): breach of contract accrues 10% per year where the contract does not stipulate a rate. On a $5,000 invoice 60 days overdue, the money already owed to you looks like this:

Total owed on a $5,000 invoice · 60 days late

$5,082.19

Growing $1.37 every day it stays unpaid

principal
$5,000
interest
$82.19

Rate verified 2026-07-06 · Source: California Legislative Information · Methodology

Calculate your invoice

Rate prefilled from the California default (10% per year) — override it if your contract sets its own.

$

60 days overdue

%

California default: 10% per year

Total now owed to you · California

$5,082.19

$5,000 principal · 60 days overdue at 10%

interest accrued
$82.19
growing daily by
$1.37

Simple interest: amount × (10% ÷ 365) × 60 days. Information, not legal advice — contract terms can override statutory defaults.

The rule in plain English

California gives unpaid creditors one of the strongest default rates in the country: if a contract is breached and it does not specify its own interest rate, the obligation bears interest at 10% per year from the date of breach.

For invoices, that generally means 10% simple interest runs from the day the payment became due under the contract.

If your contract does state a rate, that rate governs (consumer usury limits aside — most ordinary B2B service contracts are outside California usury restrictions when no loan is involved).

Pre-judgment interest on contract claims is likewise 10% (Civil Code §3289), and judgments accrue 10% post-judgment.

Legal basis: Cal. Civ. Code §3289(b).

Worked example

invoice = $5,000, 60 days overdue, rate = 10.00%

daily interest = $5,000 × (10.00% ÷ 365) = $1.37

interest = $1.37 × 60 days = $82.19

total owed = $5,082.19

What to include in your demand letter

A short, factual letter recovers more invoices than a heated one. Checklist (general guidance, not legal advice):

  • Invoice number, date, original due date, and the exact principal outstanding.
  • The interest calculation shown line by line — principal, rate (10% per year), days overdue, daily amount — so there is nothing to dispute.
  • The legal or contractual basis for the interest (Cal. Civ. Code §3289(b); cite your contract clause first if you have one).
  • A single clear deadline (7 or 14 days is customary) and the payment details — remove every excuse for delay.
  • What happens next if unpaid: a letter before action, small claims / court filing, or referral to collections — stated plainly, without threats you don’t intend to keep.
  • A note that interest continues to accrue daily until payment — quote the per-day figure from the calculator above.

FAQ

What interest can I charge on a late invoice in California?
California Civil Code §3289(b): breach of contract accrues 10% per year where the contract does not stipulate a rate. On a $5,000 invoice 60 days overdue, that is about $82.19 in interest. (Cal. Civ. Code §3289(b); verified 2026-07-06.)
Do I need a clause in my contract to charge this?
Effectively yes. California has no automatic statutory right to add interest to a private commercial invoice — your contract or terms of trade should specify the rate. Without one, you are limited to the default legal rate (10% per year) on liquidated debts, typically only recoverable once you pursue the claim.
How is late payment interest calculated?
Simple interest on a daily basis: invoice amount × (annual rate ÷ 365) × days overdue. Interest normally runs from the day after the due date. The calculator above shows the formula with your own numbers.
Can I really send an invoice for the interest?
Yes — the standard practice is a short statement or updated invoice showing the principal, the daily interest accrued to date and the legal basis (Cal. Civ. Code §3289(b)). Many creditors find the demand itself prompts payment. This site provides information, not legal advice; for significant sums, confirm your position with a professional before escalating.

This page is general information about California, verified 2026-07-06 against California Legislative Information. It is not legal advice, and statutory rules have exceptions and transition rules that a short summary cannot capture. Contract terms often override statutory defaults. For significant or disputed sums, consult a qualified professional in your jurisdiction.

Other jurisdictions

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