Interest on unpaid invoices in California: 10% a year if no rate was agreed; the most you can set depends on the deal (its own sources give two answers)

California's rate when no rate was agreed

10% a year. A contract made after January 1, 1986 that sets no rate bears 10% a year after a breach (Civ. Code § 3289(b)); a creditor owed a sum certain on a set day may also recover interest from that day (Civ. Code § 3287(a)).

Two answers: California's own sources give two rates here; both are quoted in "Where California's own sources give two answers" below.

• “(b)If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach.” — Cal. Civ. Code § 3289(b), read November 6, 2026
• “(a)A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt.” — Cal. Civ. Code § 3287(a), read November 6, 2026
• “The rate of interest upon the loan or forbearance of any money, goods, or things in action, or on accounts after demand, shall be 7 percent per annum” — Cal. Const. art. XV, § 1, read November 6, 2026

The most you can set in California

For a homeowner: It depends: see Cal. Const. art. XV, § 1(1). 10 percent per annum on a loan or forbearance for use primarily for personal, family, or household purposes; a loan or forbearance used primarily for the purchase, construction or improvement of real property shall not be deemed a use primarily for personal, family or household purposes. 10% a year by written contract on a loan or forbearance for personal, family or household use (Cal. Const. art. XV, § 1(1)); money used to buy, build or improve real property is not treated as household use. It depends: see Cal. Const. art. XV, § 1.

For a business customer: Higher of 10% or 5% plus the Federal Reserve Bank of San Francisco advance rate on the 25th of the prior month. For any other use (business), by written contract (Cal. Const. art. XV, § 1(2)).

How the most you can set moves: Business contract cap: higher of 10% or FRB San Francisco advance rate (25th of prior month) + 5%.

• “(1)For any loan or forbearance of any money, goods, or things in action, if the money, goods, or things in action are for use primarily for personal, family, or household purposes, at a rate not exceeding 10 percent per annum;” — Cal. Const. art. XV, § 1(1), read November 6, 2026
• “provided, however, that any loan or forbearance of any money, goods or things in action the proceeds of which are used primarily for the purchase, construction or improvement of real property shall not be deemed to be a use primarily for personal, family or household purposes;” — Cal. Const. art. XV, § 1(1) proviso, read November 6, 2026
• “(2)For any loan or forbearance of any money, goods, or things in action for any use other than specified in paragraph (1), at a rate not exceeding the higher of (a) 10 percent per annum or (b) 5 percent per annum plus the rate prevailing on the 25th day of the month preceding the earlier of (i) the date of execution of the contract to make the loan or forbearance, or (ii) the date of making the loan or forbearance established by the Federal Reserve Bank of San Francisco on advances to member banks” — Cal. Const. art. XV, § 1(2), read November 6, 2026

Late fees in California

What the text says: Consumer installment sales (Unruh Act): a delinquency charge of up to $10 after 10 days or up to $15 after 15 days per installment, only one per installment (Civ. Code §§ 1803.6, 1810.12). For other consumer contracts, an agreed flat late fee is a liquidated-damages clause and is void unless actual damage would be impracticable or extremely difficult to fix (Civ. Code § 1671(c)–(d)); for business customers it is valid unless shown unreasonable when made (§ 1671(b)). §§ 1803.6/1810.12: retail installment contracts and retail installment (revolving) accounts for goods or services bought for other than commercial or business use. § 1671(c)–(d): retail purchase of personal property or services primarily for personal, family or household purposes, and dwelling leases. § 1671(b): everything else, including business customers. The $10 and $15 delinquency charges are for each installment in default, where the contract provides for them.

• “(a)A contract may provide that for each installment in default the buyer shall pay a delinquency charge not in excess of one of the following amounts: (1)For a period in default of not less than 10 days, an amount not in excess of ten dollars ($10). (2)For a period in default of not less than 15 days, an amount not in excess of fifteen dollars ($15).” — Cal. Civ. Code § 1803.6(a), read November 6, 2026
• “(1)A party to a contract for the retail purchase, or rental, by such party of personal property or services, primarily for the party’s personal, family, or household purposes;” — Cal. Civ. Code § 1671(c)(1), (d), read November 6, 2026
• “(d)In the cases described in subdivision (c), a provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.” — Cal. Civ. Code § 1671(d), read November 6, 2026
• “(b)Except as provided in subdivision (c), a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made.” — Cal. Civ. Code § 1671(b), read November 6, 2026
• “"Services" means work, labor and services, for other than a commercial or business use, including services furnished in connection with the sale or repair of goods as defined in Section 1802.1” — Cal. Civ. Code § 1802.2, read November 6, 2026

Does California want it agreed in advance?

Agreed in advance: yes, in the cases below. A rate above the 7% constitutional rate must be contracted 'in writing' (Cal. Const. art. XV, § 1). An installment-sale delinquency charge applies only where the contract provides for it (Civ. Code § 1803.6(a): 'A contract may provide'), and on a revolving account no charge may be imposed before the written disclosure is delivered (§ 1810.12(b)).

• “but it shall be competent for the parties to any loan or forbearance of any money, goods or things in action to contract in writing for a rate of interest:” — Cal. Const. art. XV, § 1, read November 6, 2026
• “No delinquency charge shall be imposed for any default of payment on any payment due prior to the mailing or delivery to the buyer of the written disclosure concerning the delinquency charge provided by the seller or holder of a retail installment account pursuant to subdivision (d) of Section 1810.3.” — Cal. Civ. Code § 1810.12(b), read November 6, 2026

Homeowners and businesses in California

Homeowners get more protection: the written-contract interest cap is 10% for personal/household use (but a loan or forbearance for buying, building or improving real property is not counted as household use), versus 10% or Fed advance rate + 5% for business; a flat late fee in a consumer contract is void unless damages are impracticable to fix (Civ. Code § 1671(d)), while a business-customer fee stands unless shown unreasonable (§ 1671(b)).

• “(c)The validity of a liquidated damages provision shall be determined under subdivision (d) and not under subdivision (b) where the liquidated damages are sought to be recovered from either:” — Cal. Civ. Code § 1671(c)–(d), read November 6, 2026

Prompt payment on private construction in California

What the text says: 2% a month: owner → direct contractor on undisputed progress payments not paid within 30 days of a demand notice (Civ. Code § 8800). Civ. Code § 8800 sits in the private works of improvement title; the owner and direct contractor can agree otherwise in writing. Bus. & Prof. Code § 7108.5 applies to all private works and to public works except where Pub. Contract Code § 10262 applies.

• “(c)An owner that violates this section is liable to the direct contractor for a penalty of 2 percent per month on the amount wrongfully withheld, in place of any interest otherwise due.” — Cal. Civ. Code § 8800(a), (c), read November 6, 2026
• “(a)Except as otherwise agreed in writing by the owner and direct contractor, the owner shall pay the direct contractor, within 30 days after notice demanding payment pursuant to the contract is given, any progress payment due as to which there is no good faith dispute between them.” — Cal. Civ. Code § 8800(a), read November 6, 2026
• “(b)Any violation of this section shall constitute a cause for disciplinary action and shall subject the licensee to a penalty, payable to the subcontractor, of 2 percent of the amount due per month for every month that payment is not made.” — Cal. Bus. & Prof. Code § 7108.5(b), (e), read November 6, 2026
• “(e)This section applies to all private works of improvement and to all public works of improvement, except where Section 10262 of the Public Contract Code applies.” — Cal. Bus. & Prof. Code § 7108.5(e), read November 6, 2026

Where California's own sources give two answers

California's constitution (art. XV, § 1) sets the rate of interest on accounts after demand at 7 percent per annum; its Civil Code § 3289(b) says that if a contract entered into after January 1, 1986 does not stipulate a legal rate of interest, the obligation bears interest at a rate of 10 percent per annum after a breach.

California's own words, both sides:

• “(b)If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach.” — Cal. Civ. Code § 3289(b), read November 6, 2026
• “The rate of interest upon the loan or forbearance of any money, goods, or things in action, or on accounts after demand, shall be 7 percent per annum” — Cal. Const. art. XV, § 1, read November 6, 2026

Work out a late charge in California

Set your own rate.

What was not checked for California

• California's constitution does not say whether a trade invoice that is simply paid late counts as a "forbearance" under its interest cap (Cal. Const. art. XV, § 1), so that is left open here.

Check California's own text

Before you charge: read Cal. Civ. Code § 3289(b) and the other California texts quoted on this page, or ask a lawyer. As of November 6, 2026.

This is a plain-words summary of each state's own laws as of November 6, 2026, not legal advice. Rules have exceptions. Check the state's own text, linked on every state's page, or a lawyer before you charge a late fee or interest.

Compare California with every state's answer, or with its neighbours just below.

Next door to California

• Arizona: 10% if none agreed, no general cap found
• Nevada: floats if none agreed, depends by agreement
• Oregon: 9% if none agreed, depends by agreement

Official sources for California

• Cal. Civ. Code § 3289(b) — read November 6, 2026
• Cal. Civ. Code § 3287(a) — read November 6, 2026
• Cal. Const. art. XV, § 1 — read November 6, 2026
• Cal. Civ. Code § 1803.6(a) — read November 6, 2026
• Cal. Civ. Code § 1671(c)(1), (d) — read November 6, 2026
• Cal. Civ. Code § 1802.2 — read November 6, 2026
• Cal. Civ. Code § 1810.12(b) — read November 6, 2026
• Cal. Civ. Code § 8800(a), (c) — read November 6, 2026
• Cal. Bus. & Prof. Code § 7108.5(b), (e) — read November 6, 2026

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