Interest after default -- Minimum charge for negotiated bank loan.
(1) Except as provided in KRS 360.040, the legal rate of interest is eight percent (8%)
per annum, but any party or parties may agree, in writing, for the payment of
interest in excess of that rate as follows:
(a) At a per annum rate not to exceed four percent (4%) in excess of the discount
rate on ninety (90) day commercial paper in effect at the Federal Reserve
Bank in the Federal Reserve District where the transaction is consummated or
nineteen percent (19%), whichever is less, on money due or to become due
upon any contract or other obligation in writing where the original principal
amount is fifteen thousand dollars ($15,000) or less; and
(b) At any rate on money due or to become due upon any contract or other
obligation in writing where the original principal amount is in excess of
fifteen thousand dollars ($15,000).
(2) Any party or parties to a contract or obligation described in subsection (1) of this
section, and any party or parties who may assume or guarantee the contract or
obligation, shall be bound, subject to KRS 371.190, for the rate of interest as is
expressed in the contract, obligation, assumption, or guaranty, and no law of this
state prescribing or limiting interest rates shall apply to the agreement or to any
charges which pertain thereto or in connection therewith.
(3) The party entitled to be paid in any written contract or obligation specifying a rate
of interest shall be entitled to recover interest after default at the rate of interest as is
expressed in the contract or obligation prior to the default and that interest rate shall
be the interest rate for the purpose of KRS 360.040(3). If the interest rate expressed
in the contract or obligation is a variable rate, the interest rate after default and until
judgment shall be calculated and adjusted as provided in the contract or obligation
prior to the default.
(4) The party entitled to be paid in any written contract or obligation not specifying a
rate of interest or to which no interest rate otherwise applies shall be entitled to
recover interest after default and until judgment at the legal rate of interest.
(5) Nothing in this section shall be construed to amend, repeal, or abrogate any other
law of this state pertaining to any particular types of transactions for which the
maximum rate of interest is specifically prescribed or provided.
(6) Any state or national bank may charge ten dollars ($10) for any loan negotiated at
the bank in this state, even if the legal interest does not amount to that sum.
Effective: July 14, 2018
History: Amended 2018 Ky. Acts ch. 140, sec. 1, effective July 14, 2018. -- Amended
2017 Ky. Acts ch. 17, sec. 3, effective June 29, 2017. -- Amended 1980 Ky. Acts ch.
77, sec. 1, effective April 1, 1980. -- Amended 1974 Ky. Acts ch. 321, sec. 1. --
Amended 1972 Ky. Acts ch. 216, sec. 1. -- Amended 1970 Ky. Acts ch. 67, sec. 2. --
Amended 1966 Ky. Acts ch. 234, sec. 1. -- Recodified 1942 Ky. Acts ch. 208, sec. 1,
effective October 1, 1942, from Ky. Stat. sec. 2218.
Notes of Decisions
Unifund CCR Partners v. Harrell, 509 S.W.3d 25 (Ky. 2017).
· cites it 15× “Second, charging off the account eliminates further use of the credit card and thus fixes the amount of the principal owed by the debtor to the bank as a liquidated debt. At that point, accrual of contractual interest terminates and the period for assessing prejudgment interest…”
Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443 (6th Cir. 2014).
· cites it 4× “PRA argues that “[b]ecause there was no contractually agreed upon rate being assessed after charge-off, the statutory rate under KRS § 360.010 applied as a matter of law.”
Grace v. LVNV Funding, Inc., 22 F. Supp. 3d 700 (W.D. Ky. 2014).
· cites it 21× “For contracts where the original principal amount is $15,000 dollars or less, KRS § 360.010 provides the following: The legal rate of interest is eight percent (8%) per annum, but any party or parties may agree, in writing, for the payment of interest in excess of that rate as…”
Stratton v. Portfolio Recovery Assocs., LLC, 171 F. Supp. 3d 585 (E.D. Ky. 2016).
· cites it 6× “010(1) states that the statutory prejudgment interest rate does not apply where the parties agree to be “bound” to a contractual rate of interest, it reasoned that GE could not revive its statutory right to interest by waiving its contractual right to interest.”
City of Somerset v. Bell, 156 S.W.3d 321 (Ky. Ct. App. 2005).
· cites it 4× “However, the taxpayers still argue that KRS 360.010 is applicable to their claim.”
Hearn v. Commonwealth, 80 S.W.3d 432 (Ky. 2002).
· cites it 2× “Interest must be assessed at the maximum legal rate pursuant to KRS 360.010. We find that the probation of which the Hearns are subject is governed by KRS Chapter 533 and not by KRS 532.”
Fulk v. LVNV Funding LLC, 55 F. Supp. 3d 967 (E.D. Ky. 2014).
· cites it 6× “67), plus statutory prejudgment interest under KRS § 360.010. [Record No. 8-1, p. 2] The state court Complaint alleges, in its entirety: 1.”
Cavalry SPV I, LLC v. Watkins, 249 Cal. Rptr. 3d 334 (Cal. Ct. App. 5th 2019).
“447 [analyzing a previous version of Ky. Rev. Stat. § 360.010(1) ].) The Stratton court concluded that the Kentucky statute precluded any recovery of statutory interest where the contract specified a legal rate of interest because, pursuant to the statute, a party that agreed to…”
Gresh v. Waste Servs. of Am., Inc., 738 F. Supp. 2d 702 (E.D. Ky. 2010).
“§ 360.010(1). Relying on Illinois law, Defendants argue that Gresh is not entitled to prejudgment interest on his claims of fraud and breach of the implied duty of good faith and fair dealing.”
Duff v. Bank of Louisville & Trust Co., 705 S.W.2d 920 (Ky. 1986).
· cites it 23× “215 and KRS 360.010 as they relate to certain interest charges on loans by the respondent to the movants herein.”
— Ky. Rev. Stat. § 360.010(1) — 22 cases
Unifund CCR Partners v. Harrell, 509 S.W.3d 25 (Ky. 2017).
“Second, charging off the account eliminates further use of the credit card and thus fixes the amount of the principal owed by the debtor to the bank as a liquidated debt. At that point, accrual of contractual interest terminates and the period for assessing prejudgment interest…”
Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443 (6th Cir. 2014).
“PRA argues that “[b]ecause there was no contractually agreed upon rate being assessed after charge-off, the statutory rate under KRS § 360.010 applied as a matter of law.”
Stratton v. Portfolio Recovery Assocs., LLC, 171 F. Supp. 3d 585 (E.D. Ky. 2016).
“010(1) states that the statutory prejudgment interest rate does not apply where the parties agree to be “bound” to a contractual rate of interest, it reasoned that GE could not revive its statutory right to interest by waiving its contractual right to interest.”
Cavalry SPV I, LLC v. Watkins, 249 Cal. Rptr. 3d 334 (Cal. Ct. App. 5th 2019).
“447 [analyzing a previous version of Ky. Rev. Stat. § 360.010(1) ].) The Stratton court concluded that the Kentucky statute precluded any recovery of statutory interest where the contract specified a legal rate of interest because, pursuant to the statute, a party that agreed to…”
— Ky. Rev. Stat. § 360.010(1)(b) — 2 cases
— Ky. Rev. Stat. § 360.010(3) — 3 cases
— Ky. Rev. Stat. § 360.010(4) — 3 cases
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