Two regimes that control the cost of interest
Interest is the price of money — but in South Africa that price is not left entirely to the parties. Two separate regimes pull it back. Knowing which one applies to your agreement is the whole game, because they produce very different ceilings.
- The National Credit Act 34 of 2005 (NCA). Where the Act applies, it dictates what a credit provider may charge: a closed list of permitted charges (section 101), a maximum interest rate and fees per credit sub-sector (section 105 read with the fee-and-interest regulations), and a statutory in duplum rule in section 103(5) that freezes default-period charges once they reach the unpaid capital.
- The common law plus the Prescribed Rate of Interest Act 55 of 1975. Where the NCA does not apply, the agreed rate generally governs, but it is still disciplined by the common-law in duplum rule (a rule of public policy that cannot be waived) and, where no rate is agreed, by the prescribed rate for mora and judgment interest.
So before you can state the maximum interest on any debt, you have to answer a prior question: does the National Credit Act apply to this agreement at all?
The gateway: does the National Credit Act even apply?
The NCA only governs credit agreements, and even then not all of them. The Act looks at the substance of the deal, not its label. The Supreme Court of Appeal restated this in The Profit Hub v Zuwon:
Even where an agreement is a credit agreement, the Act excludes two categories of consumer that matter here. It does not apply to a juristic person whose asset value or annual turnover equals or exceeds the threshold of R1 000 000; and it does not apply to a large agreement (principal debt of R250 000 or more) where the juristic consumer is below that R1 000 000 threshold. Those threshold exclusions for companies are decisive: if the deal falls into them, the NCA caps and the section 103(5) in duplum rule simply do not bite, and only the common law and the agreed rate apply.
NCA maximum interest rates and fees
Where the NCA does apply, section 101(1) sets out an exhaustive list of what a credit provider may charge — nothing else is permitted:
A credit agreement must not require payment by the consumer of any money or other consideration, except— (a) the principal debt, being the amount deferred in terms of the agreement, plus the value of any item contemplated in section 102; (b) an initiation fee, which— (i) may not exceed the prescribed amount relative to the principal debt … (c) a service fee … (iii) must not exceed the prescribed amount relative to the principal debt; (d) interest, which— (i) must be expressed in percentage terms as an annual rate calculated in the prescribed manner; and (ii) must not exceed the applicable maximum prescribed rate determined in terms of section 105; (e) cost of any credit insurance …; (f) default administration charges …; and (g) collection costs …
The maximum interest rate itself is fixed by regulation under section 105 as a repo-linked formula for each sub-sector of the credit market, and it is locked in at the rate prevailing on the day the credit is granted. “RR” below is the South African Reserve Bank repurchase rate. The current caps (figures last reviewed 26 June 2026) are:
- Mortgage agreements: RR + 12% per year.
- Credit facilities (credit and store cards): RR + 14% per year.
- Unsecured credit transactions: RR + 21% per year.
- Developmental credit: RR + 27% per year.
- Short-term credit: 5% per month on the first loan, 3% per month on subsequent loans in a calendar year.
- Incidental credit agreements: 2% per month.
- Other credit agreements: RR + 17% per year.
Mortgage agreements RR + 12% per year. Credit facilities RR + 14% per year. Unsecured credit transactions RR + 21% per year. Developmental credit agreements RR + 27% per year. Short-term transactions 5% per month on the first loan and 3% per month on subsequent loans … Other credit agreements RR + 17% per year. Incidental credit agreements 2% per month.
Note — “RR” is the reference rate (the SARB repurchase rate), added once — there is no multiplier. The cap is fixed at the rate in force when the credit is granted.
Because these are repo-linked formulae rather than fixed numbers, you must apply the repo rate in force when the credit was granted — and always check the current gazette before relying on a hard percentage. On top of interest, the monthly service fee is capped:
The maximum monthly service fee, prescribed in terms of section 105 (1) of the Act, is R60.
Note — The R60 per month cap is exclusive of VAT and was raised from R50. Initiation fees are separately capped per sub-sector in reg 42(2). The interest-rate caps above are the current repo-linked formulae fixed at the date of grant; the registration threshold for credit providers is now nil (R0) — see credit-provider registration.
The statutory in duplum rule — section 103(5) of the NCA
For NCA-regulated agreements, the statutory in duplum rule is the most powerful brake on runaway debt. It is wider than the common-law rule in two ways: it caps not just interest but the whole basket of default-period charges, and it does so “despite any provision of the common law or a credit agreement to the contrary” — so it cannot be drafted around.
Despite any provision of the common law or a credit agreement to the contrary, the amounts contemplated in section 101(1)(b) to (g) that accrue during the time that a consumer is in default under the credit agreement may not, in aggregate, exceed the unpaid balance of the principal debt under that credit agreement as at the time that the default occurs.
Read carefully, section 103(5) freezes the aggregate of the section 101(1)(b) to (g) charges — the initiation fee, service fee, interest, credit insurance, default administration charges and collection costs — that accrue while the consumer is in default, capping their sum at the unpaid principal balance measured as at the date default occurs. Once those accumulated charges reach the unpaid capital, they stop. The common-law rule, by contrast, looks only at interest. Section 103(5) is therefore the more protective ceiling whenever the NCA applies.
The common-law in duplum rule
Where the NCA does not apply — a loan to a large company, an excluded large agreement, or a non-credit debt — interest is still disciplined by the common-law in duplum rule. The leading modern statement is Standard Bank v Oneanate:
Two features of the common-law rule matter in practice. First, it caps interest at the level of the outstanding capital, but it is a rolling cap: if the borrower makes a payment that drops accrued interest below the capital, interest can start running again until it once more reaches the double. Second, it is a rule of public policy — the court was emphatic that it cannot be waived by the borrower or dodged by re-labelling interest as “capitalised” capital. Oneanate also confirmed that capitalised interest remains interest for the purposes of the rule.
Does the in duplum rule keep applying during litigation?
Oneanate contained one further holding that proved controversial: it said the in duplum rule was suspended once the creditor served summons, so agreed interest could resume running through the litigation. The Constitutional Court overturned that part of Oneanate in Paulsen v Slip Knot Investments.
For a credit provider, the lesson is to prosecute claims promptly — arrear interest is capped at the capital throughout the litigation, so delay no longer earns extra interest. For a borrower, it means the most you can owe in arrear interest, before judgment, is an amount equal to the outstanding capital.
Mora and judgment interest — the prescribed rate
Where a debt carries interest but no rate has been agreed and no other law fixes one, the rate is set by the Prescribed Rate of Interest Act 55 of 1975. This is the rate that runs on an overdue debt (mora interest) and on a judgment debt:
If a debt bears interest and the rate at which the interest is to be calculated is not governed by any other law or by an agreement or a trade custom or in any other manner, such interest shall be calculated at the rate contemplated in subsection (2)(a) as at the time when such interest begins to run, unless a court of law, on the ground of special circumstances relating to that debt, orders otherwise.
Since the 2015 amendment, the prescribed rate is the SARB repurchase rate plus 3,5% per annum, re-set by notice whenever the Reserve Bank moves the repo rate. The current rate was fixed by the Minister of Justice in April 2026:
Under section 1(2)(b) of the Prescribed Rate of Interest Act, 1975 (Act No. 55 of 1975), I, Mmamoloko Tryphosa Kubayi, Minister of Justice and Constitutional Development, hereby publish a rate of interest of 10.25 percent per annum as from 1 March 2026 for the purposes of section 1(1) of the said Act.
Note — This withdrew the previous notice (GN R.6668 of 26 September 2025). Because the rate tracks the repo rate, it changes over time — confirm the rate in force when interest began to run. Figures last reviewed 26 June 2026.
Note the difference between the prescribed rate and the NCA caps. The prescribed rate is a default rate — it fills the gap when parties have not agreed a rate. The NCA caps are maximums — they limit what may be agreed in a regulated credit agreement. A contract that fixes its own (lawful) rate displaces the prescribed rate but must still respect the applicable NCA cap and the relevant in duplum rule.
Worked example — Profit Hub v Zuwon at 8% per month
Profit Hub v Zuwon shows the whole analysis in one case. A finance company advanced money to a company under agreements styled as invoice “discounting”. The SCA held the deals were in substance loans (the client had to repay regardless of whether its debtors paid), and then turned to whether the NCA applied. Because the advances exceeded the R250 000 large-agreement threshold and the consumer was a juristic person, the Act was excluded:
The threshold value determined by the Minister is R1 000 000. A large agreement, as determined by the Minister in terms of s 7(1)(b), is one where the principal debt exceeds R250 000.
The consequence for interest was striking. With the NCA out of the picture, neither the section 105 rate caps nor the section 103(5) statutory in duplum rule applied. The court enforced the parties’ agreed default rate of 8% per month on the judgment debt — a rate that would be far above any NCA cap if the Act had applied. The only remaining ceilings on that interest were the common-law in duplum rule (interest cannot exceed the capital, and per Paulsen that cap holds during litigation) and contract-law controls such as the Conventional Penalties Act.
The takeaway for structuring or signing any finance deal is to work through the questions in order: first, characterise the agreement by its substance (loan, discounting or credit facility — see invoice discounting vs loans); second, test the thresholds to see whether the NCA applies at all; and only then apply the correct interest ceiling — the NCA caps and section 103(5) if the Act governs, or the agreed rate disciplined by the common-law in duplum rule if it does not. The difference, as Profit Hub shows, can be the gap between a regulated cap and 8% per month.
Frequently asked questions
The in duplum rule is the principle that unpaid interest stops accumulating once it reaches the amount of the outstanding capital. There are two versions. The common-law rule, restated in Standard Bank v Oneanate (1998), says interest stops running when the unpaid interest equals the outstanding capital, and runs again only if a payment brings interest below the capital. The statutory rule, section 103(5) of the National Credit Act, is wider: it caps the aggregate of all default-period charges — interest, fees, credit insurance, default administration and collection costs — at the unpaid principal balance. Which rule applies turns on whether the NCA governs the agreement.
Yes. In Paulsen v Slip Knot Investments (2015) the Constitutional Court held that the in duplum cap continues to operate during litigation. Its order held arrear interest at the level of the capital (R12 million on a R12 million debt) from the date the debt fell due right through to the date of judgment, and let interest resume only from judgment. That corrected Oneanate, which had suspended the rule once summons was served. A lender cannot let arrear interest run past the double simply by issuing summons and then taking its time.
For NCA-regulated agreements the maximum interest rate is a repo-linked formula set per sub-sector by regulation, fixed at the rate prevailing when the credit is granted. The current caps are roughly: mortgages RR + 12% per year; credit facilities (credit and store cards) RR + 14% per year; unsecured credit RR + 21% per year; short-term credit 5% per month on the first loan, 3% per month on subsequent loans in a calendar year; and incidental credit 2% per month (RR is the SARB repurchase rate), plus a maximum monthly service fee of R60 per month. Because the caps move with the repo rate, check the current gazette before relying on a hard percentage.
The prescribed rate of interest under the Prescribed Rate of Interest Act 55 of 1975 is 10.25% per year from 1 March 2026 (Government Notice 3887 of 2026, Government Gazette 54520). It is the default rate for mora interest (interest on an overdue debt) and for judgment debts where the parties have not agreed a rate and no other law fixes one. It tracks the SARB repurchase rate + 3.5% (variable; gazetted periodically), so it changes over time. Figures last reviewed 26 June 2026.
It depends which limit. The NCA caps and the statutory in duplum rule (s 103(5)) apply despite any agreement to the contrary, and the common-law in duplum rule is a rule of public policy that, per Oneanate, cannot be waived. But where the NCA does not apply at all — a loan to a company above the threshold, as in Profit Hub v Zuwon — the statutory caps and statutory in duplum rule fall away and a high contractual rate (8% a month) can stand, subject only to the common-law in duplum rule and controls like the Conventional Penalties Act.