Where a debtor has a contractual obligation to pay an amount of money on a stipulated date and the debtor fails to perform in terms of this obligation, the creditor will have a claim for interest on the outstanding amount, known as mora interest.
The interest payable must be determined with reference to the rate as prescribed by the Prescribed Rate of Interest Act 55 of 1975. From 1 October 1993, the prescribed rate of interest was set at 15,5% per annum and remained at this level until 13 July 2014. From 1 August 2014, the prescribed rate of interest changed to 9%. As of 1 March 2016, the Prescribed Rate now has been increased to 10,25% per annum as published recently in the Government Gazette.