Skip to main content

After 15 Years at 5.00%, Pre- and Post-Judgment Interest Goes Up

27 July 2023

By JD Reed – 

Most Americans are aware that interest rates started to dramatically rise commencing in March 2022. Regardless, Texas’ post-judgment and pre-judgment interest rate on judgment awards remained at five percent (5.00%), until now.

The New Interest Increase Takes Effect August 1, 2023

On July 19, 2023, the Consumer Credit Commissioner of Texas released a Notice of Rate Ceilings, increasing the Post-judgment Interest Rate under Tex. Fin. Code §304.003 to eight and one-quarter percent (8.25%)—the prime rate as published by the Board of Governors for the Federal Reserve System.

Due to low prime rates (below 5%) the post-judgment interest rate remained at five percent (5.00%) for the last fifteen (15) years. This new pre- and post-judgment interest rate of 8.25% becomes effective August 1, 2023, and has real financial consequences for defendants and soon-to-be judgment-debtors in cases where a money judgment is not based on a contract which provides for interest (i.e., most lawsuits). As the prime rate published by the Board of Governors for the Federal Reserve System increases so too will Texas’ post-judgment interest under Tex. Fin. Code §304.003.

The Impact on Current and Future Cases

This new larger pre- and post-judgment interest rate substantially increases the monetary award of pre-judgment interest, considering that many money judgments take years to obtain. Further, pre- and post-judgment interest rates of 8.25%, or potentially higher in the future, will likely be a factor in settling cases, in judgment-debtors’ decisions to appeal, and in judgment-debtors’ decisions on when to pay a money judgment to a judgment-creditor.

Moreover, Tex. Fin. Code §304.001 requires that a money judgment specify the post-judgment interest rate applicable to a particular judgment. As such, attorneys drafting judgments must be aware of, apply, and incorporate the new pre- and post-judgment interest rate of 8.25%, where applicable, to money judgments submitted to Texas courts.

If you have any questions concerning this topic or other business litigation topics, you can contact JD at 469-916-7700 x110, or via email.

when it matters™
About J.D. Reed
John David “JD” Reed focuses his practice on litigation involving private equity, corporate law, finance litigation, and commercial business disputes, business partnership disputes, construction defects, DTPA/consumer protection, employment, breach of fiduciary duty, non-compete, eminent domain, and Anti-SLAPP.
Read More