Default interest
Default interest is the interest a debtor owes on a due monetary debt from the moment default arises. By law it amounts to five per cent a year — even where the contractually agreed interest is lower.
Definition
Default does not arise on maturity but on the creditor’s reminder. If a specific due date had been agreed for performance, the debtor is in default once it passes; no reminder is then needed. That is why an invoice with a clear payment date works differently from one saying «payable within 30 days».
More than five per cent is possible. Higher contractual interest remains owed during default as well, and between merchants the customary bank discount rate at the place of payment applies where it exceeds five per cent. Whoever has suffered damage beyond the default interest can claim it in addition — and then bears the burden of proof.
The wording
A debtor in default on payment of a sum of money owes default interest of five per cent per annum, even if a lower rate had been agreed by contract.
The numbers
- 5% a year
- statutory default interest, regardless of a lower contractual rate Art. 104 para. 1 CO
- without a reminder
- default arises as soon as the agreed due date passes Art. 102 para. 2 CO
- above 5%
- between merchants, the customary bank discount rate at the place of payment where it is higher Art. 104 para. 3 CO
Where to read it
Checked Aug 2026
More terms under Invoicing, payment and banking: Advance payment Allowance for doubtful debts Bad debt camt.053 Cancellation invoice Cash discount Certificate of shortfall Credit note Creditor Current account Debt enforcement Debtor Delivery note Dunning eBill Final invoice IBAN Invoice number ISO 20022 / camt Open items pain.001 Part payment Payment term Pro forma invoice QR reference QR-bill QR-IBAN Quotation Receipt Tips TWINT as a payment method Visitor taxes