Interest on unpaid invoices in Iowa: 5% a year if no rate was agreed; the most you can set depends on the deal

Iowa's rate when no rate was agreed

5% a year. 5% a year unless the parties agree in writing to a rate up to the subsection 3 maximum.

• “Except as provided in subsection 2, the rate of interest shall be five cents on the hundred by the year in the following cases, unless the parties shall agree in writing for the payment of interest at a rate not exceeding the rate permitted by subsection 3:” — Iowa Code § 535.2(1) Rate of interest, read November 6, 2026
• “Money due upon open accounts after six months from the date of the last item.” — Iowa Code § 535.2(1)(f), read November 6, 2026

The most you can set in Iowa

For a homeowner: Floating: 2 percentage points above the monthly average 10-year Treasury constant maturity rate (second preceding month), set monthly by the superintendent of banking (Iowa Code § 535.2(3)); for a consumer credit sale under the Consumer Credit Code, a finance charge up to 21% a year (or the maximum permitted by state or federal law for similar creditors) (§ 537.2201). Credit to an individual above the federal threshold amount for personal purposes is exempt (§ 535.2(2)(a)(5)).

For a business customer: Any rate agreed in writing (credit obtained for business or agricultural purposes, and corporations, are exempt from the usury limit).

• “The maximum lawful rate of interest which may be provided for in any written agreement for the payment of interest entered into during any calendar month commencing on or after April 13, 1979, shall be two percentage points above the monthly average ten-year constant maturity interest rate of United States government notes and bonds as published by the board of governors of the federal reserve system for the calendar month second preceding the month during which the maximum rate based thereon will be effective, rounded to the nearest one-fourth of one percent per year.” — Iowa Code § 535.2(3)(a)(1), read November 6, 2026
• “The finance charge, calculated according to the actuarial method, may not exceed twenty-one percent per year on the unpaid balances of the amount financed.” — Iowa Code § 537.2201(2) Finance charge for consumer credit sales not pursuant to open-end credit, read November 6, 2026
• “A person borrowing money or obtaining credit for business or agricultural purposes, or a person borrowing money or obtaining credit in an amount which exceeds the threshold amount, as defined in section 537.1301, for personal, family, or household purposes.” — Iowa Code § 535.2(2)(a)(5), read November 6, 2026
• “The following persons may agree in writing to pay any rate of interest, and a person so agreeing in writing shall not plead or interpose the claim or defense of usury in any action or proceeding” — Iowa Code § 535.2(2)(a), read November 6, 2026

Late fees in Iowa

What the text says: Consumer credit transactions (closed-end): delinquency charge may be contracted for on an installment not paid in full within 10 days of its due date, max 5% of the unpaid installment or $30 (once per installment); open-end credit: up to $30 per late payment. Consumer credit transactions under the Iowa Consumer Credit Code — incl. consumer credit sales of goods or services (work and labor) to an individual, primarily for personal, family or household purposes, by a seller who regularly extends such credit, where the debt is payable in installments or a finance charge is made, up to the federal threshold amount.

• “With respect to a consumer credit transaction not pursuant to an open-end credit arrangement and other than a consumer lease or consumer rental purchase agreement, the parties may contract for a delinquency charge on any installment not paid in full within ten days after its due date, as originally scheduled or as deferred, in an amount as follows:” — Iowa Code § 537.2502(1) Delinquency charges, read November 6, 2026
• “For an interest-bearing transaction, an amount not exceeding five percent of the unpaid amount of the installment, or a maximum of thirty dollars.” — Iowa Code § 537.2502(1)(b), read November 6, 2026
• “With respect to open-end credit, the parties may contract for a delinquency charge on any payment not paid in full when due, as originally scheduled or as deferred, in an amount up to thirty dollars.” — Iowa Code § 537.2502(4), read November 6, 2026
• “(3) The goods, services, or interest in land are purchased primarily for a personal, family, or household purpose. (4) Either the debt is payable in installments or a finance charge is made.” — Iowa Code § 537.1301(13) Consumer credit sale, read November 6, 2026

Does Iowa want it agreed in advance?

Agreed in advance: yes, in the cases below. Interest above the 5% legal rate needs a written agreement (§ 535.2(1)); Consumer Credit Code delinquency charges are ones 'the parties may contract for' (§ 537.2502).

• “unless the parties shall agree in writing for the payment of interest at a rate not exceeding the rate permitted by subsection 3” — Iowa Code § 535.2(1), read November 6, 2026

Homeowners and businesses in Iowa

Individuals buying for personal, family or household purposes get the floating usury cap, the 21% Consumer Credit Code cap on credit sales and the $30 / 5% delinquency-charge cap; business-purpose credit may carry any agreed rate.

• “The buyer is a person other than an organization.” — Iowa Code § 537.1301(13)(a)(2), read November 6, 2026

Prompt payment on private construction in Iowa

Not found in our check for Iowa.

Work out a late charge in Iowa

Starts at Iowa's 5%, the rate when none was agreed, not a maximum.

What was not checked for Iowa

• Iowa's current monthly maximum rate (Iowa Code § 535.2(3)) was not found on the banking division's site; it is published in the Iowa Administrative Bulletin.
• No Iowa prompt-payment law for private construction was located, and the search for one was cut short.

Check Iowa's own text

Before you charge: read Iowa Code § 535.2(1) Rate of interest and the other Iowa 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 Iowa with every state's answer, or with its neighbours just below.

Next door to Iowa

• Illinois: 5% if none agreed, 9% for homes
• Minnesota: 6% if none agreed, depends by agreement
• Missouri: 9% if none agreed, depends by agreement
• Nebraska: 12% if none agreed, 16% for homes (two answers)
• South Dakota: 15% if none agreed, depends by agreement
• Wisconsin: 5% if none agreed, depends by agreement

Official sources for Iowa

• Iowa Code § 535.2(1) Rate of interest — read November 6, 2026
• Iowa Code § 537.2201(2) Finance charge for consumer credit sales not pursuant to open-end credit — read November 6, 2026
• Iowa Code § 537.2502(1) Delinquency charges — read November 6, 2026
• Iowa Code § 537.1301(13) Consumer credit sale — read November 6, 2026

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