How North Carolina’s Legal Interest Rate Can Impact Settlement Discussions
In North Carolina the legal rate of interest on a judgment is 8% per year. Parties are also permitted to contract for a rate of interest in excess of the legal rate. At the time of this writing, the effective prime interest rate is 3.25%. As a result of this disparity between the legal interest rate in North Carolina (which was established when prime interest rates were in excess of 10%) and the current prevailing interest rates, there are currently calls for the legislature to revise the legal interest rate in North Carolina. To be clear, this has not happened.