Maximum rate and effective annual rate

Under the Consumer Credit Act, the maximum for a cash loan, such as a personal loan, is an effective annual rate of 10 % since 1 January 2026. For overdrafts and for credit or customer cards with a credit option, it is 12 %. The effective annual rate is the full cost of the credit, interest and fees together, as a yearly percentage of the amount you borrow. A consumer credit contract that charges more than the maximum is void: you repay what you received, and you owe no interest or costs.

The maximum rates today

The Federal Office of Justice announced the cut on 31 October 2025. The maximum stays in force with no end date. The Federal Department of Justice and Police reviews it at least once a year, at the end of August, and any change takes effect in January of the following year.

If the maximum changes, the one in force when you signed still applies to your contract (VKKG Art. 9a).

How the maximum is set

The Consumer Credit Act (KKG) gives the job to the Federal Council. It must take into account the interest rates, determined by the Swiss National Bank, that matter for funding consumer credit, and the maximum should as a rule not exceed 15 % (KKG Art. 14).

The ordinance (VKKG Art. 1) turns this into a formula:

1. Take the three-month compounded SARON (SAR3MC), a Swiss reference interest rate.
2. Add 10 percentage points for a cash loan, or 12 for an overdraft or a card with a credit option.
3. Round to the nearest whole number.
4. The result can never be lower than 10 % for a cash loan, or 12 % for overdrafts and cards.

At the end of August 2025, the SAR3MC stood at about 0.0054 %, so the maximum for cash loans fell to the floor of 10 %. However low the reference rate falls, the maximum cannot go below that floor. If the reference rate rises, the maximum can rise with it.

What the effective annual rate includes

The effective annual rate expresses the total cost of the credit as a yearly percentage of the amount granted (KKG Art. 6). The total cost means all the costs you pay for the credit, interest and other costs included (KKG Art. 5). Every consumer credit contract must state it (KKG Art. 9), and it is this rate that the legal maximum applies to (KKG Art. 14).

The lender calculates it when the contract is signed, with the formula set out in the Act’s annex. The calculation assumes that the contract runs for the agreed term and that both sides pay on time (KKG Art. 33).

The Act lists what counts and what does not (KKG Art. 34 and 35):

If a lender charges more than the maximum

The contract is void (KKG Art. 15). You still repay the amount you received, by the end of the agreed term, in equal instalments, one a month unless the contract set longer intervals. You owe no interest and no costs on it.

Two more limits protect you:

• Late payment interest can never be higher than the rate agreed in your contract (KKG Art. 18).
• A broker who arranges a consumer credit for you may not charge you for it. What the lender pays the broker is part of the total cost, and it may not be billed to you separately (KKG Art. 35).

If you think your contract is above the maximum, do not simply stop paying, because the amount you received is still owed. Get advice first, for example from a debt advice service: see Debt help in Switzerland.

Which credits the maximum covers

The maximum comes from the Consumer Credit Act, so it covers the credits that Act covers. These include:

• loans and similar credit to a private person for private purposes
• leasing of goods for private use, where the payments rise if the contract ends early
• overdrafts and credit or customer cards with a credit option, meaning you can pay the balance in instalments

The Act does not apply to some credits, among them (KKG Art. 7):

• credits under CHF 500 or over CHF 80’000
• credits secured by a mortgage, or covered by usual bank collateral you have deposited or by enough assets you hold with the lender
• credits with no interest and no fees
• credits you must repay within three months at most

Compare the effective rate, not the interest rate

Two offers can quote the same interest rate and still cost different amounts, because fees count in the effective annual rate and not in the interest rate. When you compare, use:

1. The effective annual rate. It is in every consumer credit contract, and it includes the fees.
2. The total cost in CHF for the same amount and the same term. The rate tells you the price per year; the total tells you what the loan costs you in all.
3. The monthly payment, to check that it fits your budget.

A longer term lowers the monthly payment and raises the total cost. For more on comparing offers, read How to compare loans, and for the costs of a loan as a whole, Rates and costs. If an offer stresses speed over cost, read «Instant» loans: what fast really means.

Swizeo’s rate

Swizeo’s interest rate is 3 % a year, fixed for the whole term and the same for every loan, from CHF 1’000 to CHF 1’000’000. Its effective annual rate is about 3.04 %, below today’s maximum of 10 %.

For example, CHF 10’000 over 12 months means a monthly payment of CHF 846.94, and CHF 163.25 in interest in total.

Next step

Try an amount and a term in the loan calculator. It shows the monthly payment and the total cost before you apply, with no name or ID needed.