By Kyle Brady
It’s that time of year again! No, I’m not referring to the annual season of blissful ambition fueled by soon to be broken New Year’s resolutions. Instead, I’m referring to something just as customary: the annual assignment of the yearly interest rates on money decrees and judgments applicable to South Carolina Courts.
Perhaps (wisely) acknowledging that Lawyers make inept mathematicians, the South Carolina General Assembly enacted a law in 2005 providing a simple formula for the South Carolina Supreme Court to use in determining the interest rate applicable to money decrees and judgments entered by South Carolina Courts. South Carolina Code § 34-31-20 (B) (2020) provides that the legal rate of interest on money decrees and judgments “is equal to the prime rate as listed in the first edition of the Wall Street Journal published for each calendar year for which the damages are awarded, plus four percentage points, compounded annually.” The statute also directs the South Carolina Supreme Court to “issue an order by January 15 of each year confirming the annual prime rate.”
Wall street journal prime rate
This year, the first edition of The Wall Street Journal was published on January 3, 2022, and listed the prime rate as 3.25%. Thus, the 2022 legal interest rate applicable to money decrees and judgments will be 7.25%, compounded annually, beginning on January 15, 2022. While this rate remains constant from 2021, it is markedly lower than the rates from 2019 and 2020 (8.75% and 9.5% respectively). In fact, 7.25% marks South Carolina’s lowest legal interest rate since 2009.
So, why is the rate so low? South Carolina judgment debtors have the economy to thank. Due to the economic stress brought on by the COVID-19 pandemic, the Federal Reserve lowered interest rates drastically, and the prime rate followed suit. Because South Carolina’s legal interest rate is set at four points over the prime rate as published by The Wall Street Journal, it is directly impacted by prime rate fluctuations. Thus, economic pressures caused by COVID-19 are directly responsible for the historic lows. As the continued threat of COVID-19 and its variants loom, the 2022 South Carolina legal interest rate for judgments and money decrees remains at a historically low, 7.25%. Judgement debtors and creditors can expect this rate to remain constant until next January, when the Chief Justice opens his morning copy of The Wall Street Journal to reassess. Let’s just hope that there are no typos when he does. Wouldn’t that be interesting?
See Alexandria White, How the Prime Rate Works and How it Affects You, CNBC (Sept. 30, 2021, https://www.cnbc.com/select/prime-interest-rates/).