Iowa late fee law

5%per year

Attaches to the debt by operation of law when you agreed no rate, so it accrues before any lawsuit and can be stated on a demand letter.

The rate of interest is 'five cents on the hundred by the year' (5% per annum) unless the parties agree in writing to a higher permitted rate, for: money due by express contract, money after it becomes due, money loaned, money due on settlement of accounts from the day the balance is ascertained, money due on open accounts after six months from the date of the last item, and contracts to pay interest with no rate stipulated. Verified in the official Iowa Code 2026 text on legis.iowa.gov.

Yes. Under Iowa Code § 535.2(2)(a), corporations and persons borrowing money or obtaining credit for business or agricultural purposes may agree in writing to ANY rate of interest and may not plead usury - so there is effectively no usury cap on B2B credit. For non-exempt written agreements, the maximum lawful rate under § 535.2(3) is a floating rate (two percentage points above the monthly average ten-year constant-maturity U.S. Treasury yield, as determined monthly by the superintendent of banking).

public

For public improvement contracts, progress payments approved by the project architect/engineer must be paid within 14 days of the payment request (up to 30 days if the contract so provides); late amounts accrue interest at the rate in effect under Iowa Code § 12C.6 (public-funds deposit rate, variable) per §§ 573.12(4) and 573.14; contractors must pay subcontractors within 7 days of receipt. No prompt-payment act covering ordinary private commercial invoices was found.

Iowa Code § 535.2(7) expressly provides the interest-rate section does not apply to charges for late payment of rent. Because business-purpose credit is exempt from usury (§ 535.2(2)(a)(5)), agreed late charges/interest on B2B invoices are generally enforceable, subject to the ordinary liquidated-damages/penalty doctrine.