Section 40 — Credit Contracts and Consumer Finance Act 2003: Default interest charges

40 Default interest charges (1) A consumer credit contract must not provide that an annual interest rate applicable under the contract to any part of the unpaid balance will differ according to whether the debtor has breached the contract. (2) However, a consumer credit contract may provide for a differential rate if the higher rate is imposed only— (a) in the event of a default in payment and while the default continues; or (b) in the event of the debtor causing the credit limit under the contract to be exceeded and while the credit limit is exceeded. (3) This section does not limit Part 5 or any other rule of law that limits the amount of a default interest charge that may be imposed. Compare: Consumer Credit Code s 28 (Appendix to Consumer Credit (Queensland) Act 1994 (Queensland))