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Late Payment Interest in Michigan (2026)

5% per year — MCL 438.31: legal rate is 5% per year where no rate is agreed (7% maximum by written agreement for most non-exempt lenders). Judgment interest uses a separate T-bill-based formula (MCL 600.6013). On a $5,000 invoice 60 days overdue, the money already owed to you looks like this:

Total owed on a $5,000 invoice · 60 days late

$5,041.10

Growing $0.68 every day it stays unpaid

principal
$5,000
interest
$41.10

Rate verified 2026-07-06 · Source: Michigan Legislature — MCL 438.31 · Methodology

Calculate your invoice

Rate prefilled from the Michigan default (5% per year) — override it if your contract sets its own.

$

60 days overdue

%

Michigan default: 5% per year

Total now owed to you · Michigan

$5,041.10

$5,000 principal · 60 days overdue at 5%

interest accrued
$41.10
growing daily by
$0.68

Simple interest: amount × (5% ÷ 365) × 60 days. Information, not legal advice — contract terms can override statutory defaults.

The rule in plain English

Michigan’s default legal rate is 5% per year: where money is due on a contract that names no rate, simple interest accrues at 5%.

Michigan’s usury statute caps agreed rates at 7% for many written agreements, but business entities are broadly exempt — B2B late-fee clauses (e.g. 1.5%/month) between companies are generally enforceable.

Judgment interest is computed differently: under MCL 600.6013, most judgments accrue interest at the 5-year Treasury note rate plus 1%, recalculated each January and July.

Pre-judgment interest on a money claim generally runs from the filing of the complaint under the same T-bill formula — the 5% legal rate covers the pre-litigation period for liquidated debts.

Legal basis: MCL 438.31; MCL 600.6013.

Worked example

invoice = $5,000, 60 days overdue, rate = 5.00%

daily interest = $5,000 × (5.00% ÷ 365) = $0.68

interest = $0.68 × 60 days = $41.10

total owed = $5,041.10

What to include in your demand letter

A short, factual letter recovers more invoices than a heated one. Checklist (general guidance, not legal advice):

  • Invoice number, date, original due date, and the exact principal outstanding.
  • The interest calculation shown line by line — principal, rate (5% per year), days overdue, daily amount — so there is nothing to dispute.
  • The legal or contractual basis for the interest (MCL 438.31; MCL 600.6013; cite your contract clause first if you have one).
  • A single clear deadline (7 or 14 days is customary) and the payment details — remove every excuse for delay.
  • What happens next if unpaid: a letter before action, small claims / court filing, or referral to collections — stated plainly, without threats you don’t intend to keep.
  • A note that interest continues to accrue daily until payment — quote the per-day figure from the calculator above.

FAQ

What interest can I charge on a late invoice in Michigan?
MCL 438.31: legal rate is 5% per year where no rate is agreed (7% maximum by written agreement for most non-exempt lenders). Judgment interest uses a separate T-bill-based formula (MCL 600.6013). On a $5,000 invoice 60 days overdue, that is about $41.10 in interest. (MCL 438.31; MCL 600.6013; verified 2026-07-06.)
Do I need a clause in my contract to charge this?
Effectively yes. Michigan has no automatic statutory right to add interest to a private commercial invoice — your contract or terms of trade should specify the rate. Without one, you are limited to the default legal rate (5% per year) on liquidated debts, typically only recoverable once you pursue the claim.
How is late payment interest calculated?
Simple interest on a daily basis: invoice amount × (annual rate ÷ 365) × days overdue. Interest normally runs from the day after the due date. The calculator above shows the formula with your own numbers.
Does the Michigan rate change?
The 5% legal rate is fixed. The separate judgment-interest rate (T-note + 1%) resets each 1 January and 1 July.
Can I really send an invoice for the interest?
Yes — the standard practice is a short statement or updated invoice showing the principal, the daily interest accrued to date and the legal basis (MCL 438.31; MCL 600.6013). Many creditors find the demand itself prompts payment. This site provides information, not legal advice; for significant sums, confirm your position with a professional before escalating.

This page is general information about Michigan, verified 2026-07-06 against Michigan Legislature — MCL 438.31. It is not legal advice, and statutory rules have exceptions and transition rules that a short summary cannot capture. Contract terms often override statutory defaults. For significant or disputed sums, consult a qualified professional in your jurisdiction.

Other jurisdictions

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