What are the federal regulations for interest rates?

Interest rates are governed by federal regulations that apply to banks across the country. In Oklahoma, the usury laws state that interest charged on consumer loans must not exceed 12 percent. Any loan with an interest rate higher than 12 percent is considered “unconscionable.” In addition to the usury laws, federal regulations also dictate the way that retail banks handle interest rates. The Federal Reserve Bank requires banks to disclose information about the interest rate, fees, and other terms of any loan before the loan agreement is finalized. This is known as the Truth in Lending Act and it ensures that consumers are aware of the true cost of the loan before they agree to it. Banks are also forbidden from charging differential rates, meaning that they must charge the same interest rate to all borrowers with similar credit and debt-to-income ratios. Banks must also comply with the Equal Credit Opportunity Act, which prevents them from denying credit to someone based on their sex, race, religion, age, or marital status. The Federal Deposit Insurance Corporation (FDIC) also regulates the deposit rates that banks are allowed to charge. By law, banks must pay customers a “fair and reasonable” rate of interest on their accounts. Overall, federal regulations help protect consumers by ensuring that banks cannot unfairly charge high interest rates or deny credit to people who do not fit certain criteria.

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What are the federal regulations for interest rates?

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