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Prejudgment Interest Calculator

Calculates interest on a debt or damages from the due date to a future date, based on U.S. state laws. For variable-rate states, you must provide the current rate.

Your details

Select the state whose laws govern the debt or claim. Interest rates and calculation methods vary significantly.

The original amount of the debt or damages, in USD.

The date the payment was due or the date of the breach/injury. Interest typically starts accruing from this date.

The date up to which you want to calculate interest (e.g., today's date or a proposed judgment date).

Some states apply different interest rates for contract claims versus tort (damages) claims.

Required for states with variable rates (e.g., Florida, New Jersey, Texas) or if the fixed rate is unknown. Enter the annual percentage rate (e.g., 6 for 6%). Check your state court's website or statutes for the current rate.

Result

Total Amount Claimed (Principal + Interest) US$12,764.38

The full amount you can demand, including the original debt and accrued interest.

How it is calculated

Days Elapsed Total number of days interest has accrued.
1,009 days
Applicable Annual Interest Rate The annual percentage rate used for calculation. Uses your custom input, a special state rule, or the fixed statutory rate. If none, defaults to 0%.
10 %
Prejudgment Interest Interest accrued from the due date to the calculation date.
US$2,764.38
Keep in mind
  • This calculator provides an estimate based on common statutory rules. Many states have exceptions, caps, or different rates for specific claim types (e.g., medical malpractice, government claims).
  • Rates for states marked as 'Variable' (like Florida, New Jersey, Texas) often change quarterly or annually. You MUST provide the current rate in the 'Annual Interest Rate' field for these states. Check your state's court website or statutes for the exact rate applicable to your claim date.
  • Some states calculate interest differently (e.g., simple interest only, no compounding). This calculator uses simple daily interest, which is the most common method.
  • This is not legal advice. For important claims, consult an attorney to verify the applicable interest rate and calculation method.

Indicative result, calculated from the details and the rules listed below. It does not replace an official calculation or advice from a professional.

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Demand Letter for Payment
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What Is Prejudgment Interest?

Prejudgment interest is the interest that accrues on a sum of money—such as a debt or an award for damages—from the date the money was due (the breach date) until the date a court enters a final judgment. It is designed to compensate the creditor or injured party for the loss of the use of their money during the litigation period. Laws governing prejudgment interest vary significantly from state to state in the U.S.

How Is Prejudgment Interest Calculated?

The basic formula for simple prejudgment interest is: Principal Amount × Annual Interest Rate × (Number of Days / 365).

The key variables are:

  • Principal: The original amount owed.
  • Annual Rate: This is set by state statute. Some states have a fixed rate (e.g., 6% in Alabama), while others have a variable rate tied to an index like the federal funds rate (e.g., Florida, New Jersey, Texas). Some states, like California, have different rates for contract claims (10%) versus other claims.
  • Accrual Period: Interest typically starts on the date the payment was due or the cause of action accrued. The end date is usually the date of judgment or a settlement demand.

Example Calculation

Imagine you are owed $10,000 under a contract governed by California law. The payment was due on January 15, 2024, and you are preparing a demand letter on October 20, 2026.

  • Principal: $10,000
  • Annual Rate (CA Contract): 10%
  • Days Elapsed: From Jan 15, 2024 to Oct 20, 2026 is 1009 days.
  • Daily Rate: 10% / 365 = 0.0274%
  • Interest: $10,000 × (10/100) × (1009/365) = $10,000 × 0.10 × 2.76575 ≈ $2,765.75
  • Total Claim: $10,000 + $2,765.75 = $12,765.75

You would demand $12,765.75 in your settlement letter.

Common State Rules and Variations

  • Fixed Rate States: Many states, like Colorado (8%) and Illinois (5%), have a statutory rate that changes only by legislative action.
  • Variable Rate States: States like Florida, New Jersey, and Texas publish a new rate periodically (often quarterly). You must look up and input the current rate for your calculation period. For Texas, both contract and tort claims use variable rates.
  • Contract vs. Tort: A few states, including California, apply a different (often higher) rate to claims arising from a written contract.
  • Caps and Exceptions: Some states cap the total interest or exclude certain types of claims (e.g., punitive damages) from prejudgment interest.

What to Do After Calculating Interest

Once you have calculated the total amount owed, the next step is to formally demand payment. A well-drafted Demand Letter for Payment or Settlement Demand Letter outlines the debt, the calculation of interest, and sets a deadline for payment before you consider filing a lawsuit. Including a clear breakdown of the principal and interest strengthens your position and shows you have done your homework.

Frequently asked questions

What's the difference between prejudgment and post-judgment interest?

Prejudgment interest covers the period from when the debt was due until the court enters a judgment. Post-judgment interest applies from the judgment date until the debt is actually paid by the losing party. They often have different statutory rates.

How do I find the current interest rate for my state?

For states with variable rates (e.g., Florida, New Jersey, Texas), check the website of your state's courts, treasury, or legislature. They often publish a quarterly or annual notice. For fixed-rate states, you can refer to the state's civil procedure or finance statutes.

Does interest compound daily?

Most states mandate simple interest for prejudgment claims, meaning interest is calculated only on the principal, not on previously accrued interest. This calculator uses simple interest.

Can I claim prejudgment interest if there was no written contract?

Yes, in many cases. While contract claims often have a specified or statutory rate, tort claims (like personal injury or property damage) may also accrue prejudgment interest, though sometimes at a different rate. Your state's laws will specify.

What if the debtor made partial payments?

Partial payments typically reduce the principal balance from the date they are received. Interest then accrues on the new, lower balance. This calculator assumes no intervening payments. For complex payment histories, manual adjustment or legal advice is recommended.

Is prejudgment interest always awarded by the court?

Not automatically. It depends on your state's law and the judge's discretion in some cases. It is more commonly awarded in contract cases. Clearly stating your interest calculation in a pre-litigation demand letter increases the likelihood it will be recognized.

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