What are the maximum interest rates on CD loans?

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Question:

What are the regulations regarding the maximum interest rate banks can charge on closedended loans secured by CDs? We charge 3% over the rate the CD is earning with a minimum rate of 6%. Is this permissible?

Answer:

I'm not aware of any federal regulations as to setting a maximum rate on this or any type of loan. For that, you'll need to look to state law for any usury limits.

Reg Q used to have provisions regarding the minimum amount of spread required on a loan secured by deposit accounts, but that was removed some time ago.

First published on BankersOnline.com 06/9/03