What are the federal regulations for interest rates?

Federal regulations regarding interest rates are primarily enforced by the Federal Deposit Insurance Corporation (FDIC). Under the Truth in Lending Act of 1968, banks are required to disclose in writing all relevant information regarding credit and loan terms. This includes the amount of interest to be charged, the period of time the interest covers, and any other associated fees. Additionally, the Federal Reserve establishes a maximum interest rate that banks may charge on credit and loan products. This maximum rate, referred to as the “Usury Law,” is determined by the FDIC and varies state by state. For example, in North Carolina, the usury law states that banks cannot charge interest rates higher than 8% for consumer loans and 12% for some commercial loans. Any interest rate higher than the established usury law is considered illegal and is subject to prosecution. In addition, government agencies like the Federal Trade Commission (FTC) may review credit card offerings to ensure that consumers are not being charged excessive interest rates. It is important to remember to research the interest rates of any loan or credit product prior to signing any agreements.

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