Contract-rate judgments in Texas and the 18% cap
Most Texas judgments carry the monthly rate the OCCC publishes. A judgment on a contract that sets its own interest rate is different: it carries the contract's rate instead, but never more than 18% a year. Here is when that rule applies, how the cap works, and what the difference looks like over two years.
In short
- A judgment on a contract that provides for interest or a time-price differential earns the lesser of the contract rate and 18% a year (Fin. Code §304.002).
- Most other money judgments earn the monthly rate: prime, but never below 5% or above 15% (§304.003).
- The 18% cap has no matching floor: a contract at 3% gives a 3% judgment rate.
- Either way, the judgment must state its rate (§304.001), and the interest compounds once a year (§304.006).
Which judgments carry a contract rate
Section 304.002 of the Texas Finance Code covers "a money judgment of a court of this state on a contract that provides for interest or time price differential." For those judgments, post-judgment interest runs at the lesser of the rate specified in the contract, "which may be a variable rate," and 18% a year. A time-price differential is the finance charge in a credit sale, such as a retail installment contract.
Every other money judgment covered by chapter 304 falls under §304.003 and takes the rate the OCCC sets for the month the judgment is rendered. Chapter 304 does not apply to judgments in delinquent-tax suits or judgments whose interest rate is set by Title 2 of the Tax Code (§304.301). That covers judgments for injuries and other claims not based on a contract, and judgments on contracts that say nothing about interest.
A Texas money judgment has to state the post-judgment rate that applies to it (§304.001). So the judgment itself gives the rate. It may not say where the rate came from, especially when the contract rate and the monthly rate are the same; the contract or the case record may be needed to show that.
How the 18% cap works
The cap is a ceiling on the contract rate, not a separate rate. A contract at 24% gives an 18% judgment; a contract at 18% or less gives the contract's own rate. Unlike the monthly rate, which has a 5% floor, §304.002 has no floor, so a contract at 3% gives a 3% judgment.
For a fixed contract rate, the rate is set once and lasts for the judgment's life, as the monthly rate does. The statute also allows a variable contract rate. JudgmentVault calculates fixed contract rates only; it does not yet follow a variable rate as it changes.
What earns interest, and when
The rest of the interest rules are the same for both kinds of judgment. Interest runs from the date the judgment is rendered until it is satisfied (§304.005(a)), except that if a party who was a claimant at trial receives an extension of time to file an appellate brief, interest does not accrue during the extension (§304.005(b)); JudgmentVault does not calculate that pause. Post-judgment interest on a judgment of a Texas court compounds annually (§304.006). How the rate is applied, what it runs on and how payments are credited are covered in how post-judgment interest works in Texas.
Worked example
A judgment rendered on March 15, 2024 awards $10,000.00 in damages and $1,500.00 in attorney's fees: $11,500.00 in all. Nothing has been paid. The table shows the balance on its first two anniversaries under three different rates. A 24% contract is capped at 18.00%; a judgment with no contract rate carries the March 2024 monthly rate of 8.50%.
| Rate source | Rate | March 15, 2025 | March 15, 2026 |
|---|---|---|---|
| Contract at 24% a year | 18.00% | $13,570.00 | $16,012.60 |
| Contract at 10% a year | 10.00% | $12,650.00 | $13,915.00 |
| No contract rate (monthly rate) | 8.50% | $12,477.50 | $13,538.09 |
Each figure is the amount owed on that anniversary, after the year's interest has compounded. They come from the same calculation engine as JudgmentVault's calculators, computed when this page was built.
Judgments these rules do not cover
Child support judgments follow their own interest rules under the Family Code, and judgments from federal courts or other states' courts use different rate rules. JudgmentVault does not calculate those, nor judgments rendered before 2005. The full list is in the Texas methodology.
Sources
- Tex. Fin. Code §304.001: a money judgment must state its post-judgment rate.
- Tex. Fin. Code §304.002: a judgment on a contract that provides for interest or a time-price differential: the lesser of the contract rate, which may be variable, and 18% a year.
- Tex. Fin. Code §301.002(a)(16): definition of time price differential.
- Tex. Fin. Code §304.003: every other money judgment: the monthly rate, not less than 5% or more than 15%.
- Tex. Fin. Code §304.005: accrual from rendition until satisfied; the appeal-extension pause.
- Tex. Fin. Code §304.006: post-judgment interest compounds annually.
- Tex. Fin. Code §304.301: chapter 304 does not apply to delinquent-tax judgments or Tax Code rates.
- OCCC post-judgment rate history: the published monthly rates.
The rules JudgmentVault applies, and which are still pending legal review, are listed rule by rule in how JudgmentVault calculates Texas judgments.