The effective annual interest rate is the most important comparison figure for consumer loans in Switzerland. It includes all costs of a loan and enables a fair comparison of different offers. In Switzerland, the effective annual interest rate for consumer loans may not exceed 10% - as of January 2026. For credit cards, the rate is capped at 12%.
What is the effective annual interest rate?
The effective annual interest rate (also called: effective rate) states the actual annual cost of a loan as a percentage. Unlike the nominal rate, it includes all mandatory ancillary costs such as processing fees, administration costs, and other charges. It enables an objective comparison of different loan offers.
Difference between nominal rate and effective annual interest rate
The nominal rate is the pure interest rate, without ancillary costs. The effective annual interest rate includes all costs. The effective annual interest rate is therefore always higher than or equal to the nominal rate. Only the effective annual interest rate is relevant for comparing loan offers.
Legal cap in Switzerland
The maximum interest rate for consumer loans in Switzerland is set by the Federal Council. The legal basis for this is the Consumer Credit Act (KKG). The amount is determined using a fixed calculation formula in the ordinance (VKKG). This cap applies to all consumer loans. Loan offers above this rate are prohibited by law. The cap is regularly reviewed by the Federal Council and can be adjusted.
How to compare correctly
Always compare the effective annual interest rate, not the nominal rate. Make sure you compare the same term. Take into account optional additional costs such as payment protection insurance, which does not have to be included in the effective annual interest rate. Use our loan calculator for a quick comparison.