Debt interest and in duplum calculator

An old debt arrives with a number on it that makes no sense. You borrowed a few thousand rand years ago and the statement now says you owe five times that. Almost all of the growth is interest, and there is a rule of South African law saying a large part of that interest cannot be charged.

The rule is called in duplum, which is Latin for "double". It says arrear interest stops running once it equals the capital still owed. Not double the original loan, and not double every year. Once the unpaid interest reaches the same amount as the outstanding capital, it stops. This calculator applies that rule to your own numbers.

What this tool works out and who it is for

You enter the capital that was outstanding when you fell behind, the interest rate a year, the date the debt fell into arrears, the date you want the interest worked out to, any payments you have made since, and whether the debt is a credit agreement such as a loan, credit card, store account or vehicle finance.

The tool returns the interest before the cap, the interest a creditor may actually charge, the balance owing and, importantly, the date on which interest stops growing at your rate. That last figure turns an abstract rule into a date on a calendar.

It is for anyone being chased for an old debt, anyone with a statement they cannot reconcile, anyone weighing a settlement offer from a debt collector, and anyone who is owed money and wants to know what they may lawfully charge.

How the calculation works

The service runs the following steps in order.

It counts the days between the date the debt fell into arrears and the end date you gave. If you leave the end date blank, it uses today. If your end date falls before your start date, the tool refuses to calculate and tells you so.

It then works out simple interest with one formula: the capital, multiplied by the rate as a fraction, multiplied by the number of days, divided by 365. The rate table fixes the year at 365 days. Simple means the interest is worked out on the capital only. It is not added to the capital and charged interest on in turn.

It compares that figure with the capital. If the interest is less than the capital, the full amount runs. If it has reached or passed the capital, the tool caps it at the capital and marks the cap as reached. It then warns you that if your statement shows arrear interest of more than the capital, you should ask the creditor in writing to justify it and to correct the account.

Next it works out the date the cap bites. Because the interest is simple, that date depends only on the rate, not on the size of the debt. The number of days is 365 multiplied by 100 and divided by the rate. At 20 percent a year that is 1 825 days, about five years. At 10 percent it is 3 650 days, about ten years. At 5 percent it is roughly twenty years. A R2 000 debt and a R2 000 000 debt at the same rate reach their ceiling on the very same day. If you enter a rate of zero, no cap date is shown and the tool warns you that only the capital appears.

Finally it works out the balance: the capital, plus the interest actually allowed, less the payments you have made. If that comes out at zero or below, the tool shows zero and warns you that your payments already cover the capital and the allowed interest, so if the creditor still says you owe money you should ask for a full statement showing every charge.

There are three things the tool tells you in words rather than in numbers, and they matter as much as the arithmetic.

The rule cannot be contracted out of. It applies whether or not your agreement mentions it, and a clause saying otherwise does not help the creditor.

Payments reopen the gap. This is the part people misunderstand. The cap is not a permanent stop. It measures the interest against the capital still outstanding. If you make a payment, the arrear interest is no longer equal to the outstanding capital, so interest can run again until it once more reaches that level. Paying a little every month keeps the meter alive.

Most real accounts compound. The calculator uses simple interest, because that is the common-law starting point and the basis on which the rule is usually explained. Many bank and store accounts add the interest to the balance every month and then charge interest on the new total, which grows faster. The ceiling on arrear interest still applies, but your statement will not match this calculation line for line.

If you tell the tool the debt is a credit agreement, it adds a further warning. Under the National Credit Act 34 of 2005 a stricter cap applies while you are in default. The total of interest, initiation and service fees, default administration charges and collection costs may not exceed the unpaid balance at the time the default began. That statutory cap, in section 103(5) of the Act, is often more generous to you than the common-law rule shown here, and it counts the fees as well as the interest.

The law behind it

The in duplum rule is not in any statute. It is a rule of the South African common law, developed by the courts over a long period, and it applies to arrear interest on a debt.

Where a contract sets no interest rate, the rate that applies comes from the Prescribed Rate of Interest Act 55 of 1975. The prescribed rate is the repo rate plus 3.5 percentage points. It changes whenever the repo rate changes, which is why this site does not publish a figure for it. Look up the prescribed rate that applied during your own period, because a debt that ran across several years may have run at several different rates.

For credit agreements the National Credit Act 34 of 2005 applies on top of the common law. Section 103(5) contains the cap described above. The Act also regulates what a credit provider may charge in the first place, and how a default must be handled. The rate table on this site records these sources with an effective date, and interest rules change, so treat every figure here as something to confirm.

One more point of law. The courts have treated the in duplum rule differently once a summons has been issued and the matter is being litigated, so a judgment debt can behave differently from an ordinary arrear account. If a summons has been served on you, get advice rather than relying on the calculation here.

Worked example

This example is illustrative. Nomsa took a private loan of R10 000 and stopped paying on 1 January 2000. The agreed rate was 20 percent a year. A collector contacts her on 1 January 2024 and says the debt is now well over R50 000. She has paid nothing.

The period is 8 766 days. The interest before the cap is R10 000 multiplied by 0.20, multiplied by 8 766, divided by 365. That is R48 032.88, so on the face of it the collector's number looks about right.

But the in duplum rule caps arrear interest at the outstanding capital, which is R10 000. The interest a creditor may actually charge is therefore R10 000, not R48 032.88. The balance is the capital of R10 000 plus the allowed interest of R10 000, less nothing paid, which is R20 000.

The tool also shows Nomsa the date the growth stopped. At 20 percent the cap is reached after 365 multiplied by 100, divided by 20, which is 1 825 days. Counting 1 825 days from 1 January 2000 lands on 30 December 2004. Every rand of interest added since then is interest the common law does not allow.

Two things would change that answer. A payment along the way would have reopened the gap and let interest run again. And if this were a credit agreement rather than a private loan, the National Credit Act cap would apply instead and would cover collection charges too.

She should also check whether the debt has prescribed at all. Ordinary debts prescribe after three years. See how to check if a debt has prescribed and what happens when a debt prescribes.

What this tool does not decide

A court decides what you owe. So, in the first instance, does the creditor's own statement. This calculator gives you a defensible figure to argue from, not a number that binds anybody.

Your real statement may differ for good reasons. Compounding, a rate that changed during the period, capitalised fees, a payment holiday, a re-arrangement, or a judgment already granted will all move the number. If the creditor's figure is higher than the calculation here, ask in writing for a full statement showing every charge and compare it line by line.

The tool does not tell you whether the debt has prescribed, whether the collector is entitled to collect it, or whether the original agreement was lawful. It does not calculate compound interest. It does not apply the National Credit Act cap arithmetically; it tells you the cap exists and that it may serve you better.

When to get advice, and the free route

Start free. If the debt is a credit agreement, the National Credit Regulator takes complaints about credit providers and debt collectors on 0860 627 627. The National Financial Ombud deals with disputes involving banks, credit providers and insurers at no charge, and you do not need an attorney to approach either.

Write to the creditor first. Ask for a full statement of account from the date of default, showing capital, every interest charge and every fee. Say in your letter that you rely on the in duplum rule and, if it is a credit agreement, on section 103(5) of the National Credit Act. A collector who cannot justify the interest often drops it.

If the debt has been listed against your name, our guide on how to dispute a listing on your credit report explains the free process for correcting an incorrect entry.

Get advice from a person if a summons has been served on you, if a judgment has already been granted, if your home or vehicle is at risk, or if the amounts are large. If you cannot afford an attorney, Legal Aid South Africa can be reached on 0800 110 110, and our legal aid page sets out who qualifies. If you are owed a modest amount by someone else, the Small Claims Court checker shows a free way to recover it.

LawMatch is not a law firm and this page is general information, not legal advice. Use the figure as a starting point for a conversation with the creditor, and confirm your position before you sign or pay anything.

Frequently asked questions

Does in duplum mean I never pay more than double the loan?

Not quite. It means the arrear interest cannot exceed the capital still outstanding. Fees, legal costs and charges are treated separately at common law, and the balance can move above double if you make payments that reopen the gap. Under the National Credit Act the cap is drawn more widely and includes fees.

Does the rule apply automatically or must I raise it?

The rule applies as a matter of law and a creditor cannot contract out of it. In practice you still have to raise it, because a creditor charging too much is unlikely to correct the account on its own. Put it in writing.

Why does the cap date depend only on the interest rate?

Because the calculation uses simple interest. The interest each year is a fixed percentage of the capital, so the number of years needed to reach one hundred percent of the capital is one hundred divided by the rate, whatever the amount owed.

What interest rate should I enter if my agreement does not state one?

The prescribed rate under the Prescribed Rate of Interest Act. It is the repo rate plus 3.5 percentage points and it changes when the repo rate does, so look up the rate for the period your debt ran rather than using a figure you remember.

My statement is much higher than the calculator. Who is wrong?

Possibly neither. Your account probably compounds monthly and may carry fees this calculator does not model. Ask for a full statement and check whether the arrear interest, on its own, has passed the outstanding capital. If it has, ask the creditor to justify it.

Does making a small payment help or hurt me?

It helps in that it reduces the capital, and it hurts in that it reopens the gap the in duplum rule had closed. If you are settling an old debt, negotiate the whole amount in writing before you pay anything.