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Rhode Island Interest Rates Laws

There are limits to how much interest a creditor may legally charge borrowers, but numerous exceptions and at least one U.S. Supreme Court ruling have all but gutted most of these limits. Quite a few state laws exclude revolving credit from these limits, while national banks may charge the highest rate allowed in their home state, regardless of where the borrower lives (based on the Supreme Court's Marquette National Bank v. First of Omaha Corp. ruling). Even local banks are permitted to "import" higher interest rate limits from other states with higher limits.

Statutory Interest Rate Limits in Rhode Island at a Glance

Under Rhode Island law, creditors may charge up to 12 percent interest on debt without an agreement, but up to 21 percent if there is an agreement. Exceptions include pawn brokers, licensed lenders, retail finance charges, and revolving credit (which includes all credit cards). Keep in mind, however, that you may pay more than 21 percent interest if your bank has imported a higher rate limit from another state.

The following table lists additional details about interest rate limits in Rhode Island. See FindLaw's Debt Collection Laws and Personal Finance sections to learn more.

Legal Maximum Rate of Interest 12% absent agreement otherwise (§6-26-1); otherwise, 21% (§6-26-2)
Penalty for Usury (Unlawful Interest Rate) Contract shall be void; knowing violation is criminal usury with imprisonment up to 5 years (§6-26-3); borrower may recover twice amount of usurious interest paid (§6-26-4)
Interest Rates on Judgments 12% unless otherwise already agreed upon rate (§9-21-10)
Exceptions Pawnbroker (§19-26-18); persons licensed (§6-26-2); revolving or open-end credit plan; finance charge for retail sales (§6-27-4)

Note: State laws are subject to change at any time, usually through the enactment of newly signed legislation or voter-approved ballot initiatives, but sometimes through the decisions of higher courts. While we strive to ensure the accuracy of these pages, you also may want to contact a Rhode Island consumer protection attorney or conduct your own legal research to verify the state law(s) you are researching.

A Brief History of Usury Laws

Laws limiting interest rates are traditionally referred to as usury laws. The term usury dates to the Middle Ages, when it applied to any kind of money lending that involved the accrual of interest. Any kind of interest was once frowned upon regardless of the actual rate, and thus called usury, but the term eventually was used only to describe excessive interest rates or deceptive lending practices.

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