Interest rates are compensation for the time-value of money, and are calculated on judgments (the amount of money one party to a lawsuit is ordered to pay another party) based on the applicable state or federal statutes. There are often different interest rates set by law for prejudgment interest (the interest on the amount owed before the judgment) and post-judgment interest (the interest on the amount owed after the judgment). The calculation of prejudgment and post-judgment interest rates vary from state to state (and in federal court), and require a careful analysis of the statutes.

In Iowa, interest rates on judgments are governed by state statutes, which set forth the rates for both prejudgment and post-judgment interest. Prejudgment interest is calculated from the time the party was damaged or from the time the money was due and is intended to compensate the plaintiff for the loss of use of the money during the period before judgment. The rate for prejudgment interest in Iowa is typically set by statute and can vary depending on the type of case and the specific circumstances. Post-judgment interest, on the other hand, is interest that accrues on the amount of the judgment from the date the judgment is entered until it is paid. In Iowa, the post-judgment interest rate is also established by statute and is calculated at a rate prescribed by the Iowa Supreme Court, which may change annually. Attorneys handling cases in Iowa must review the current statutes and potentially applicable case law to determine the correct interest rates for their specific cases.