Reference · California · 2026
California late payment interest rate
When your contract sets no rate, the California figure for interest on an overdue B2B invoice is 10%, under Cal. Civ. Code § 3289(b).
After a breach of contract not stipulating a rate. Ordinary trade credit is generally outside the usury rules; judgments also 10%. No fixed ceiling on an agreed commercial late fee — Civ. Code § 1671(b) presumes the clause valid unless the party challenging it proves it was unreasonable when the contract was made.
- Rate
- 10%
- Statute
- Cal. Civ. Code § 3289(b)
- Type
- Fixed by statute.
- Source
- leginfo.legislature.ca.gov · verified July 9, 2026
What 10% comes to on an unpaid invoice
Simple interest at 10% a year on a 365-day year. Count the days from when interest starts to run in California, which is not always the due date.
| Invoice | 30 days | 60 days | 90 days |
|---|---|---|---|
| $5,000 | $41.10 | $82.19 | $123.29 |
| $10,000 | $82.19 | $164.38 | $246.58 |
| $50,000 | $410.96 | $821.92 | $1,232.88 |
Work out the interest on your invoice
Prefilled with California's legal rate of 10%. If your contract sets a rate, use that instead.
Interest you can claim
$164.38
$10,164.38 with the invoice · $2.74 a day
The ceiling
How high can a late fee go in California?
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.
California's ceiling: No fixed ceiling on a commercial late fee: Cal. Civ. Code § 1671(b) presumes the clause valid unless the party challenging it proves it was unreasonable when the contract was made.
That generally leaves room for the common 1.5%-a-month (18%) rate, provided it reflects what late payment actually costs you.
Ceiling checked September 12, 2026.
Late payment wording for a California invoice
On your invoice
Payment is due by the date shown on this invoice. Late payments are subject to interest at 10% a year, the legal rate under Cal. Civ. Code § 3289(b).
This restates what California 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 California law sets it.
How California compares
Of the 46 states with a rate that applies on its own, 7 set a higher one and 33 a lower one. The middle of the range is 8%.
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 Cal. Civ. Code § 3289(b).