Frequently asked questions

Penalty interest is determined by the Interest Act. Penalty interest is the reference rate set by the European Central Bank in six-month intervals + 7 percentage points. The Bank of Finland announces the confirmed reference rate, the penalty interest rate and its period of validity at the end of June and December every year.

• If the running interest on debt taken out before 1 February 2010 is higher than the penalty interest announced by the Bank of Finland, the penalty interest applied for delayed payment is the loan's original interest rate.

• If the debt in question is taken out after 31 January 2010 and more than 180 days have passed from the due date, the maximum rate of penalty interest applicable is the penalty interest announced by the Bank of Finland if the total remaining debt has already fallen due.

Penalty interest may be accrued from the due date onwards, assuming that a due date was set in the first place. If no due date was set, penalty interest generally begins to accrue 30 days after the date on which the creditor demands payment from the debtor.

For debts of private individuals where the debt is not related to the debtor's business activities, the rate of penalty interest may sometimes be negotiated.

Negotiation is possible if delayed payment is due to financial difficulties arising from illness, unemployment or other special circumstances and the cause is primarily not the debtor's fault.

Negotiation is also a possibility when sufficiently weighty justification for it exists. In assessing this, the following circumstances are considered:

• the amount of penalty interest in proportion to the debtor's financial standing
• whether the debtor has been too casual about borrowing money or repaying the debt.
• whether the debtor has justification for not paying back the debt

Read more
Delayed payment and collection
The semi-annually announced penalty interest rates are available e.g. on the Bank of Finland website