Interest, Usury and Late Charges

The rate of interest shall be five cents on the hundred by the year in the following cases, unless the parties shall agree in writing for the payment of interest. The maximum lawful rate of interest which may be provided for in any written agreement for the payment of interest entered into during any calendar month, shall be two percentage points above the monthly average ten-year constant maturity interest rate of United States government notes and bonds as published by the board of governors of the federal reserve system for the calendar month second preceding the month during which the maximum rate based thereon will be effective, rounded to the nearest one-fourth of one percent per year. Any rate of interest specified in any written agreement providing for the payment of interest shall, if such rate was lawful at the time the agreement was made, remain lawful during the entire term of the agreement, including any extensions or renewals thereof, for all money due or to become due thereunder including future advances, if any. (I.C.A. § 535.2)

The Iowa Supreme Court has held that a late payment charge is considered to be “interest” as that term is defined in Iowa’s usury statute. See State ex rel. Turner v. City of Altoona, 274 N.W.2d 366 (Iowa 1979).