Reference · Alabama · 2026
Alabama late payment interest rate
When your contract sets no rate, the Alabama figure for interest on an overdue B2B invoice is 6%, under Ala. Code § 8-8-1.
Accrues from the day the money should have been paid (§ 8-8-8). Written contract → 8%; ≥ $2,000 principal → any agreed rate (§ 8-8-5).
- Rate
- 6%
- Statute
- Ala. Code § 8-8-1
- Type
- Fixed by statute.
- Source
- law.onecle.com · verified July 9, 2026
Statute text read on law.onecle.com, a legal mirror, because the official Alabama site blocks automated access. Confirm it against the official code before relying on it in a dispute.
What 6% comes to on an unpaid invoice
Simple interest at 6% a year on a 365-day year. Count the days from when interest starts to run in Alabama, which is not always the due date.
| Invoice | 30 days | 60 days | 90 days |
|---|---|---|---|
| $5,000 | $24.66 | $49.32 | $73.97 |
| $10,000 | $49.32 | $98.63 | $147.95 |
| $50,000 | $246.58 | $493.15 | $739.73 |
Work out the interest on your invoice
Prefilled with Alabama's legal rate of 6%. If your contract sets a rate, use that instead.
Interest you can claim
$98.63
$10,098.63 with the invoice · $1.64 a day
The ceiling
How high can a late fee go in Alabama?
Your contract decides. The rate above only applies when your terms are silent. Between businesses, an agreed late-interest rate or late fee replaces it, within two limits: the state's ceiling on agreed rates, and the rule that a late fee must compensate you rather than punish the customer.
Alabama's ceiling: No limit on an agreed rate where the principal is $2,000 or more (Ala. Code § 8-8-5).
On smaller invoices, check Alabama's general limit before using the common 1.5%-a-month (18%) rate.
Ceiling checked September 12, 2026.
Late payment wording for a Alabama invoice
On your invoice
Payment is due by the date shown on this invoice. Late payments are subject to interest at 6% a year, the legal rate under Ala. Code § 8-8-1.
This restates what Alabama law applies when your contract is silent. If your contract sets a rate, quote that instead. The wording doesn't say when interest starts, because that differs by state; the note at the top of this page covers it where Alabama law sets it.
How Alabama compares
Of the 46 states with a rate that applies on its own, 32 set a higher one and 5 a lower one. The middle of the range is 8%.
Same 6% figure: Arkansas, Maryland, Minnesota, North Dakota, Oklahoma, Pennsylvania, Texas and Virginia.
Interest is the fallback. Getting paid on time is the plan.
DueTrail turns overdue invoices into managed cases with reviewable reminders and recorded promises to pay, so invoices get settled before anyone reaches for Ala. Code § 8-8-1.