Late fee laws by state

No. Congress has not set a maximum late fee for a commercial invoice between two businesses. Federal usury and credit rules are aimed at loans and consumer credit, not at the percent you wrote on a freelance invoice. The cap, if there is one, is a state statute, and most states do not supply one for this kind of debt. That is why 1.5 percent a month shows up in so many contracts. It is a market habit, not a federal schedule. If a page cites a federal percent for your invoice, ask for the section number.

Because the rent statutes are easy to find and the invoice statutes are not. A residential late fee is often capped at a percent of rent or a flat dollar amount, and that number looks precise, so it gets copied under the wrong heading. It does not apply to a business invoice. Charging a client the rent cap, or refusing to charge a written 1.5 percent because of a rent cap, are both mistakes. Read the statute's first lines. If it says landlord, tenant, or dwelling, it is not your invoice.

No. 1.5 percent a month is 18 percent a year of simple interest, and that rate fits a written commercial deal in most states. It does not fit Arkansas, where Amendment 89, section 3, caps other loans and contracts at 17 percent. In Florida it sits on the 18 percent simple interest ceiling for obligations of $500,000 or less, so compounding can push it over. In Minnesota it can exceed the 8 percent cap when the client is an individual. Write it down, keep it simple, and check the state before you send a number higher than 18 percent.

The legal rate is the percent the state uses when your contract says nothing. It is often 5, 6, 8, or 9 percent a year, and in some states it moves with an index. The contract rate is the percent you and the client agreed to in writing. That agreed rate is what you should charge, up to any commercial ceiling the state actually has. If the invoice was silent, you get the legal rate. If it named 1.5 percent a month, you get that rate, subject to the cap.

Usually no. Prompt payment acts in the states on this site are written for government bills or for construction contracts. They make an agency or a property owner pay a contractor on a clock, and some of them add their own interest if that clock is missed. They do not set the late fee on a logo, a campaign, or a consulting invoice to a private company. If your client is a state agency or you are a subcontractor on a construction job, read that statute. Everyone else should use the contract rate and the state's ordinary interest rule.

The state you pick in the calculator is not a choice of law clause. Courts look at the contract first. If you wrote that Wisconsin law governs, that writing is the starting point. If you wrote nothing, a court may look at where the work was done, where the client is, and where the contract was formed. Those tests can point at different states. Use the client's state when you are staring at a silent invoice and you need a conservative default. If the amount is large, ask a lawyer which state's statute actually applies before you sue.

No, not as a default. Simple interest applies the percent to the original unpaid amount. Compound interest applies it to the amount plus earlier fees, so the fee grows on itself. Several states, including Florida and Minnesota, treat compounding as a way to blow past a cap that the nominal rate would have met. This calculator uses simple interest on a 365 day year and shows the arithmetic. If your contract says compound, you need a statute that allows it. If the contract says nothing, do not compound.

Follow the lawyer, then tell me if the statute on this page is stale. A table cannot see your contract, your client's entity type, or a bill that passed last month. The figures here are tied to section numbers I could verify, and several cells say to confirm because published lists disagree. A lawyer who has the invoice in hand outranks a calculator. What you should not do is follow a blog that quotes a rent cap and calls it the invoice rule. Ask for the section. If they cannot name it, they are guessing.

Start with the state where you will actually have to sue, which is often the client's state. Look up that row for the silent contract rate, because you do not have a written rate to enforce. Then look at the years you have left and the small claims dollar limit, so you know whether this is a short form case or a civil case. Do not borrow a harsher state's cap to scare the client. A demand that cites the wrong statute is easy to ignore.