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Is it legal to charge interest on interest under South

Hi "Is it legal...

Hi "Is it legal to charge interest on interest under South African law? I was charged interest on overdue account in June 2017 and then the following month was charged further interest on this amount - not sure if that's legal?"

Lawyer's Assistant: Have you talked to a South African lawyer about this?

No would like to do so now

Lawyer's Assistant: What steps have you taken so far?

Have requested clarification of interest rate charged and interest calculations

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

Yes - maximum interest rate chargeable on overdue levy / utilities bill (is there a statutory maximum in south africa)

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Answered in 9 minutes by:
1/17/2018
Christiaan K
Category: South Africa Law
Satisfied Customers: 211
Experience: Attorney & Director at Lombard Kotze Incorporated
Verified

Good day

My name is ***** ***** I will assist you in answering your question today so please feel free to ask as many follow-up questions as you like until you are satisfied that I have answered your question.

It certainly is legal and have been done since man first stepped foot here. It is called compounded interest.

Interest is charged on regular intervals such as monthly and then added to the capital amount which becomes the new capital that is utilised to calculate the interest for the new month. This is normally regulated by the agreement between the parties.

Maximum interest rate differ, for example:

  • home loans 18.75% per year;
  • credit cards and store cards 21,48% per year; and.
  • unsecured credit transactions 26,48% per year etc

I trust that this answered your question.

Please be so kind as to rate my service by clicking on the relevant stars or smiley faces. If you do not rate my service, I do not get paid by the website so I would really appreciate it if you would be so kind as to rate my service positively.

Kind regards

Christiaan K
Category: South Africa Law
Satisfied Customers: 211
Experience: Attorney & Director at Lombard Kotze Incorporated
Verified
Christiaan K and 87 other South Africa Law Specialists are ready to help you
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Customer reply replied 4 months ago
Hm. Thought there were specific consumer protection laws against compound interest on things like levy / overdue rent...
Customer reply replied 4 months ago
34;Section 79 of the Strata Schemes Management Act, Act 138 of 1996 (New South Wales Consolidated Acts) deals with interest and discounts on contributions and Section 79(2) provides that a contribution, if not paid at the end of one month after it becomes due and payable, bears until paid simple interest ...
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Category: South Africa Law
Satisfied Customers: 211
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Experience: Attorney & Director at Lombard Kotze Incorporated

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DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

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