What is interest on arrears?
The purpose of interest on arrears is to encourage recipients of invoices to pay invoices on time and to provide compensation to the sender of the invoice if payment is delayed beyond the due date stated on the invoice. Accrual of interest on arrears begins from the due date of the original invoice.
Interest on arrears accrues until the overdue debt has been paid in full. In the case of consumers, the rate of interest on arrears is 7 percentage points higher than the reference interest rate set by the European Central Bank. In commercial agreements, however, the rate of interest on arrears is at least 8 percentage points higher than the reference interest rate set by the European Central Bank. Please note that the interest rate may also be based on a separate agreement and might, in that case, differ from those mentioned above. You can check the amount of interest and the interest rate percentage associated with your debt in the collection letter sent to you.