Assigned to FICO FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
FACT SHEET FOR S.B. 1059
judgments; interest rates
Purpose
Adjusts the effective date of the prime rate, as published by the Board of Governors of the
Federal Reserve System (Federal Reserve), for the purpose of determining interest on judgments
specified in statute.
Background
Statute governs interest rates on loans, indebtedness, obligations and judgments. For any
loan, indebtedness or obligation, excluding medical debt, the interest rate is 10 percent per year,
unless a different rate is contractually agreed upon in writing. The interest rate on judgments,
excluding judgments on medical debt, is the lesser of either 10 percent per year or 1 percent plus
the prime rate as published by the Federal Reserve on the date the judgment is entered, unless
specified in statute or a different rate is contracted for in writing. The judgment must state the
applicable interest rate and the rate may not change after the judgment is entered. For any
judgments made on a written agreement evidencing a loan, indebtedness or obligation with an
interest rate within the statutory limit, excluding judgments on medical debt, statute requires the
rate provided in the agreement to apply to the interest and to be specified in the judgment
(A.R.S. ยง 44-1201).
Published by the Federal Reserve every business day in Statistical Release H.15, the prime
rate is a benchmark interest rate determined using the rate posted by a majority of the top 25, by
assets held in domestic offices, insured U.S.-chartered commercial banks. The prime rate on
January 17, 2024, is 8.5 percent (Federal Reserve).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
1. Specifies the effective date of the prime rate as the business day following publication by the
Federal Reserve.
2. Makes technical changes.
3. Becomes effective on the general effective date.
Prepared by Senate Research
January 18, 2024
MG/JC/cs