(a) Interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute; provided the annual rate of interest to be paid in an action arising out of a consumer debt where a natural person is a defendant shall be two per centum per annum (i) on a judgment or accrued claim for judgments entered on or after the effective date of the chapter of the laws of two thousand twenty-one which amended this section, and (ii) for interest upon a judgment pursuant to section five thousand three of this article from the date of the entry of judgment on any part of a judgment entered before the effective date of the chapter of the laws of two thousand twenty-one which amended this section that is unpaid as of such effective date.
§ 5004.Rate of interest.
Article 50. Judgments Generally · Last amended 2022 · Last verified July 21, 2026
In one sentenceCPLR 5004 sets the general statutory interest rate at nine percent per year, but fixes a lower two percent rate for judgments against individual consumer debtors, while preserving how amounts already paid before the rate change were applied.
Full Text of CPLR 5004
(b) For the purpose of this section “consumer debt” means any obligation or alleged obligation of any natural person to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family or household purposes, whether or not such obligation has been reduced to judgment, including, but not limited to, a consumer credit transaction, as defined in subdivision (f) of section one hundred five of this chapter.
(c) This section does not affect or create any rights or remedies related to any amounts paid prior to the effective date of this subdivision, including amounts paid to satisfy judgments or to accrued interest or fees paid, or with respect to judgments satisfied prior to the effective date of this subdivision. For amounts paid prior to the effective date of this subdivision and lawfully applied in satisfaction or partial satisfaction of interest or fees accrued prior to the effective date of this subdivision, this section shall not be construed to require a judgment creditor or sheriff to (i) return or refund such amounts to judgment debtors; or (ii) apply such payments to satisfy any part of a money judgment other than fees or interest upon judgment pursuant to section five thousand three of this article.
(d) If any word, phrase, clause, sentence, paragraph, subdivision, or part of this section or its application to any person or circumstance is held invalid by any court of competent jurisdiction after exhaustion of all further judicial review, the invalidity shall not affect, impair, or invalidate the remainder of this section or applications of this article which can be given effect without the invalid provision or application, and to this end the provisions of this section are severable.
Plain-English Summary
Every interest calculation under CPLR 5001, 5002, and 5003 depends on a rate, and CPLR 5004 supplies it. The default statutory rate is nine percent per year, a figure that has stayed fixed in New York law for decades even as market interest rates have swung widely above and below it. That flat rate applies unless another statute sets something different for the type of claim involved.
A 2021 amendment carved out a lower rate for a specific category of debtor. Where the defendant is a natural person and the debt arose from a consumer transaction, the interest rate drops to two percent per year. This lower rate applies to judgments entered on or after the amendment's effective date, and also applies going forward to the unpaid portion of judgment interest on older, pre-existing judgments under CPLR 5003 that remained unpaid as of that date. The statute defines consumer debt broadly: any obligation of a natural person to pay money arising from a transaction where the money, property, insurance, or services involved were primarily for personal, family, or household use. That reaches everyday consumer debt, including consumer credit transactions, whether or not the debt has already been reduced to judgment.
The statute is careful not to unwind past transactions. It doesn't create any new right to claw back amounts already paid toward interest or fees that accrued before the lower rate took effect, and it doesn't force a judgment creditor or sheriff to redirect payments that were properly applied to interest or fees accrued before the change. That protects the finality of payments and satisfactions that happened under the old nine percent regime.
Finally, the section includes a severability clause: if a court strikes down any part of the statute after full appellate review, the rest of the section survives and applies wherever it can be given effect without the invalid piece. That is boilerplate insurance against a successful constitutional or statutory challenge to any single provision here, so a partial defeat in court doesn't unravel the whole interest scheme.
Frequently Asked Questions
What is the standard interest rate on a New York judgment?
CPLR 5004 sets the default rate at nine percent per year, unless another statute specifies a different rate for the type of claim.
Is there a lower interest rate for consumer debt judgments in New York?
Yes. Judgments against a natural person arising out of consumer debt carry a reduced rate of two percent per year under the 2021 amendment to CPLR 5004.
What counts as consumer debt under CPLR 5004?
It means any obligation of a natural person to pay money from a transaction where the money, property, insurance, or services were primarily for personal, family, or household purposes, including consumer credit transactions.
Does the two percent rate apply to judgments entered before the 2021 amendment?
It applies to the unpaid interest accruing under CPLR 5003 on the unpaid part of a judgment entered before the amendment's effective date, going forward from that date.
Does the lower consumer debt rate require refunding money already paid?
No. CPLR 5004(c) states the section doesn't require a judgment creditor or sheriff to return amounts already paid and lawfully applied to interest or fees that accrued before the rate change.
What happens if a court strikes down part of CPLR 5004?
The severability clause in subdivision (d) preserves the rest of the section, so an invalid provision doesn't undo the remaining parts of the statute.
Advisory Committee Notes
(See also Advisory Committee notes preceding § 5001, under subheading “Interest.”).
This section codifies former New York law. CPA §§ 480 and 481 contemplated the award of interest at the legal rate. 3 Bender, New York Practice 523, 525 (Warren ed 1954). Under § 370 of the General Business Law this rate is six per cent. The committee considered changes in interest rate a substantive matter beyond its competence.
The phrase “except where otherwise prescribed by statute” has been added in the interest of clarity, since there are various laws which provide for interest at a rate other than the legal rate. Specific sections providing for rates other than the legal rate would govern. See, e.g., Gen Munic Law § 3-a (three per cent maximum for recoveries against a municipal corporation, except in actions to recover damages for wrongful death or in condemnation proceedings, where the maximum rate is four per cent); Pub. Housing Law § 157(5) (three per cent maximum for recoveries against a housing authority, except in actions to recover damages for wrongful death or in condemnation proceedings, where the maximum rate is four per cent); Unconsol. Laws, McK. § 2501, CLS c 195, § 1 [Public Corporation Law] (four per cent maximum for recoveries against a public corporation).
This section is not intended to disturb the decision in Moscow Fire Ins. Co. v Heckscher & Gottlieb, 260 App Div 646, 23 NYS2d 424 (1st Dept 1940), affd 285 NY 674, 34 NE2d 377 (1941), where the court held that the six per cent interest rate on judgments did not apply in a case where the defendant was prevented from paying a judgment by court order. The court awarded interest at the rate the money involved had actually earned during the period that the defendant was prevented from paying the judgment. See also CPA §§ 136, 530(4).
Until 1972, CPLR 5004 provided that the “legal rate” of interest would apply to claims, verdicts and judgments in litigation. This had the effect of adopting the prevalent rate of interest applicable on the money market in New York, of course subject to the New York usury maximum. In 1972 this adoptive provision of CPLR 5004 was repealed and a straight six percent rate of interest substituted. See the Commentaries on McKinney’s CPLR 5004. With the increases in market interest in recent years, the six percent for litigated obligations has become too unrealistic and the Committee has been asked, both formally and informally, to consider a change. Deeming this more a matter of substance than procedure, despite the embodiment of the interest rate in CPLR 5004, the Committee has until this year maintained a hands-off attitude, deferring to more appropriate legislative channels for remedial action. This has not been forthcoming. The Committee therefore recommends what it feels to be a step toward remedying the discrepancy. The Committee recommends an increase from six percent to nine percent. Though this is a 50 percent increase, it achieves that proportional size only because of the low figure of six percent that has been retained for almost a decade in disregard of prevalent economic conditions.
The Committee has had reported to it many examples of a party’s litigation conduct apparently motivated by the low interest rate contained in CPLR 5004. When the sums involved in the case are large, it is self-evident that the longer the defendant delays the case—assuming that the plaintiff will ultimately prevail—the longer the defendant will be able to keep money at a six percent rate that he would have to pay two, three or even four times more for on the money market. Instances have been reported to us of patently meritorious appeals taken in commercial cases merely to obtain the delay, and of tort appeals, where possible in bifurcated trials, of liability findings just to postpone the trial of the damages issue. In wrongful death cases, for similar reasons, insurers have incentive to delay payment and, eschewing settlement, to force cases to trial. In death cases interest runs from the time of death. In personal injury cases, no interest runs at all until verdict, and takes up at only six percent at that time.
The Committee is concerned that the CPLR 5004 interest rate has now become so low, as against the market, that much time is being spent, especially by more sophisticated categories of potential judgment debtors, in an effort to exploit it. This undermines the system. Arguments are made to reinstate the market rate under CPLR 5004. These arguments have merit. The Committee believes that the subject should be studied more intensely by the Legislature, through channels equipped to examine the adverse impact a low litigation interest rate may be having. Indeed, the interest limitations on lending institutions, which are substantially above the present CPLR 5004 rate, occasioned a special bill from an extraordinary session of the Legislature (L.1980, c.883), lest much banking business leave the state. Consumer loans were the principal subject. Interest rates on them were stated in the Governor’s message accompanying the bill to be both “inflexible” and “in most cases, substantially below prevailing market rates.” They were still higher by far to begin with than the six percent CPLR 5004 rate.
Amendment History
Add, L 1962, ch 308; amd, L 1972, ch 358, § 1; L 1981, ch 258, § 1, eff June 25, 1981; L 2021, ch 831, § 1, effective April 30, 2022.
Source & verification. Provision text, History, and Advisory
Committee Notes are reproduced verbatim from the Consolidated Laws of New York.
Last verified July 21, 2026.
· Official source
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