Each state has statutory limits on the amount of interest a lender may charge, traditionally referred to as usury laws. While these statutes set limits on the amount of interest charged to consumers and business borrowers, they tend to be quite limited in real practice, particularly with respect to credit cards. Laws often have exceptions for certain types of lenders or allow higher rates if agreed to by both parties. Also, the U.S. Supreme Court decided in 1978 (Marquette National Bank v. First of Omaha Corp.) that national banks may charge the highest rate allowed in their home state, regardless of where the borrower lives. Additional federal law gave state banks the similar ability to "export" lower rates as well.
Keep in mind that when applying for a credit card online, you agree to the terms (usually in fine print) set out by the lender.
Overview of Arkansas Interest Rate Limits
Arkansas's legal limits on interest rates is encoded in the state constitution, which says both consumer and nonconsumer rates may not be more than 5 percent above the Federal Reserve discount rate (maximum 17 percent for consumer loans). But don't forget that this law does not apply to most bank loans, as explained in the preceding section.
|Legal Maximum Rate of Interest||Consumer and nonconsumer rate is 5% above Federal Reserve discount rate (consumer rate is capped at 17%) (Const. Art. XIX §13)|
|Penalty for Usury (Unlawful Interest Rate)||Contracts calling for more than lawful rate are void as to unpaid interest and debtor may recover twice amount of interest paid (Const. Art. XIX §13)|
|Interest Rates on Judgments||Rate of interest for contracts in which no rate of interest is agreed upon shall be 6% per annum. (Const. Art. XIX §13)|
Note: State laws are always subject to change, usually through the enactment of new statutes but also through higher court rulings and other means. You may want to contact an Arkansas consumer protection attorney or conduct your own legal research to verify the state law(s) you are researching.
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Arkansas Interest Rate Laws: Related Resources
Contact a qualified attorney.