LEGAL GLOSSARY
Interest
Interest is the price paid in return for using a sum of money for a certain period or for late payment of a monetary debt, and as a rule it is calculated by applying an annual rate to the principal. It has three basic types: contractual interest agreed by the parties, statutory interest applied where interest must be paid but the rate has not been set in the contract, and default interest accruing when the debtor falls into default. Rates are not fixed; they are determined according to the contract, whether the matter is commercial and the legislation in force.
Scope
The general framework of interest is regulated in Articles 88 and 120 of the Turkish Code of Obligations (TBK), and the determination of rates in Law No. 3095 on Statutory Interest and Default Interest.
- Contractual interest: Agreed by contract. TBK Art. 88/2 imposes an upper limit on the contractual rate that is linked to the rate in the legislation; in commercial matters, however, the interest rate is freely determined, and the provisions protecting consumers are reserved (Turkish Commercial Code (TTK) Art. 8).
- Statutory interest: Applies where interest must be paid and the rate has not been set in the contract. According to Article 1 of Law No. 3095, as amended in 2026 by Law No. 7589, the rate is determined by reference to the rediscount rate of the Central Bank and may change during the year.
- Default interest: The interest paid by a debtor who falls into default on a monetary debt, unless otherwise agreed in the contract (Law No. 3095, Art. 2; TBK Art. 120). In commercial matters, if the advance interest rate of the Central Bank is higher, that rate may be claimed; contractual default interest is also subject to the limit in TBK Art. 120/2.
Practical significance
In an interest claim, the type, rate and starting date must be indicated separately; for commercial debts, unless the contract provides otherwise, interest runs from the end of the maturity or, if there is no maturity, from the day of the formal notice (ihtar) (TTK Art. 10). Compound interest cannot be charged on statutory interest and default interest (Law No. 3095, Art. 3); adding interest to the principal is possible only in the limited commercial relationships in TTK Art. 8/2. If the rate has not been set in the contract, the legislation in force on the date the interest debt arose is the basis (TBK Art. 88/1); Law No. 3095, Art. 4/a contains a separate rule for foreign currency debts.
Commonly confused concepts
Default is the situation in which the debtor does not perform a due debt on time; default interest is one of its statutory consequences in monetary debts. If the loss exceeds the default interest, the debtor also covers the excess loss unless it proves that it was not at fault (TBK Art. 122). Interest is also distinct from a contractual penalty (cezai şart); agreements contrary to the rule on the start of default interest in debts of interest and annuity are subject to the provisions on contractual penalties (TBK Art. 121).
Sources and scope
- Presidency of the Republic of Türkiye, Legislation Information System (Mevzuat Bilgi Sistemi) — Law No. 6098, Turkish Code of Obligations · Art. 88, Art. 120–122(accessed: September 24, 2026)
- Presidency of the Republic of Türkiye, Legislation Information System (Mevzuat Bilgi Sistemi) — Law No. 3095 on Statutory Interest and Default Interest · Art. 1, 2, 3, 4/a(accessed: September 24, 2026)
- Presidency of the Republic of Türkiye, Legislation Information System (Mevzuat Bilgi Sistemi) — Law No. 6102, Turkish Commercial Code · Art. 8, Art. 10(accessed: September 24, 2026)
The explanation is for general information; a specific case must be assessed separately.