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Washington Interest Rates Laws

Brief Summary of Washington Interest Rate Laws

In practice, individuals sign (or, if online, click to approve) a stated interest rate when applying for credit. These rates can be quite steep; but since they are contractual agreements, they are exempt from state "usury" laws limiting interest rates. In other words, state interest rate limits seldom apply to most consumer credit agreements. So without a contract (which exempts these limits), the maximum rate of interest allowed in Washington is 12 percent.

State Usury Laws in General

State laws that place limits on the amount of interest a creditor may charge are sometimes called usury laws. The term "usury" was used in the Middle Ages to describe any kind of interest-bearing debt -- in fact, interest was looked down upon in general. But after interest became more common, the term was reserved for particularly excessive interest rates. Therefore, usury laws generally prohibit the charging of excessive interest, even though they rarely hold sway in the real world.

Anyone who uses a credit card knows that interest rates often are much higher than Washington's 12 percent statutory limit. Why is that?

Well, consumers may agree to pay a higher rate if it means they can secure credit, thus waiving these protections. Similarly, such agreements often say (in the fine print) that they may raise your rate at a moment's notice. The statute also states that the legal maximum rate only applies when there is no "written contract rate."

Learn more about Washington's interest rate laws in the table below. See Usury Laws and Limits on Credit Card Interest Rates for more information.

Legal Maximum Rate of Interest 12% absent written contract rate (§19.52.010(1))
Penalty for Usury (Unlawful Interest Rate) Debtor entitled to costs, attorney's fees, and twice amount paid in excess of what lender is entitled to (§19.52.030(1))
Interest Rates on Judgments Contract rate as long as within statutory limit or maximum rate; child support, 12% (§4.56.110)
Exceptions Broker dealers (§19.52.110); retail installment contract or transaction (§19.52.100, §19.52.130); sales contract providing for deferred payment (§19.52.120); financing of mobile homes (§19.52.160)

Note: State laws are constantly changing -- contact a Washington consumer protection attorney or conduct your own legal research to verify the state law(s) you are researching.

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