Interest rates are compensation for the time-value of money, and are calculated on judgments (the amount of money one party to a lawsuit is ordered to pay another party) based on the applicable state or federal statutes. There are often different interest rates set by law for prejudgment interest (the interest on the amount owed before the judgment) and post-judgment interest (the interest on the amount owed after the judgment). The calculation of prejudgment and post-judgment interest rates vary from state to state (and in federal court), and require a careful analysis of the statutes.

In California, interest rates on judgments are governed by state law. Prejudgment interest, which is the interest accrued from the time the money is owed until a judgment is entered, can be awarded at the discretion of the court or as provided by contract or statute. The rate for prejudgment interest is generally 10% per annum for personal injury or wrongful death cases due to tortious conduct, unless a different rate is contracted for. For other types of cases, the prejudgment interest rate is set at 7% per annum unless a different rate is specified in a contract. Post-judgment interest, which is the interest that accrues after a judgment has been entered, is set at a rate of 10% per annum in California, as specified by California Civil Code Section 3289(b) and California Constitution Article XV Section 1. This interest rate applies until the judgment is paid. It is important to note that these rates are subject to change, and an attorney can provide the most current information and assist with the calculation of interest on judgments.