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Consumer Credit Regulation: 8.8.1 Background

“Deferred interest” plans are credit card accounts that promote “no interest” until a certain date, but then retroactively assess interest starting from the purchase date if the consumer does not pay off the entire balance by the specified date.549 For example, if a consumer buys a $2,500 living room set on December 20, 2019 using a one-year deferred interest plan, then pays off all but $100 by December 20, 2020, the lender will add to the next bill all of the interest on the entire $2,500 dating back one year, which would be nearly $400 if t

Consumer Credit Regulation: 8.8.2.2 Credit CARD Act Provisions for Deferred Interest Plans

Deferred interest plans are a creation of Regulation Z, as they would violate several provisions of the Credit CARD Act if not for the exceptions carved out to permit them. In fact, at one point, the FRB had banned deferred interest plans in the Credit CARD UDAP Rule, citing the fact “the assessment of accrued interest [from these plans] causes substantial injury to consumers.”582

The exceptions that permit the existence of deferred interest plans include:

Consumer Credit Regulation: Louisiana

Legal Interest Rate: La. Stat. Ann. § 9:3500

Contract: La. Stat. Ann. § 9:3500

Judgment: La. Stat. Ann. §§ 9:3500, 13:4202

Consumer Loans: La. Stat. Ann. §§ 9:3510 to 9:3568 (§ 9:3519), Louisiana Consumer Credit Law

Consumer Credit Sales: La. Stat. Ann. §§ 9:3510 to 9:3568 (§ 9:3520), Louisiana Consumer Credit Law

Auto Finance: La. Stat. Ann. §§ 6:969.1 to 6:969.54 (§§ 6:969.9 to 6:969.18), Motor Vehicle Sales Finance Act

Consumer Credit Regulation: Maine

Legal Interest Rate: Me. Stat. tit. 9-B, § 432

Contract: Me. Stat. tit. 9-B, § 432

Judgment: Me. Stat. tit. 14, §§ 1602-B, 1602-C

Consumer Supervised Loans—Licensed Lenders: Me. Stat. tit. 9-A, §§ 1-301, 2-101 to 2-601 (§ 2-301), Maine UCCC

Consumer Credit Sales: Me. Stat. tit. 9-A, §§ 2-101 to 2-601 (§ 2-201), Maine UCCC

Revolving Charge Accounts: Me. Stat. tit. 9-A, §§ 2-101 to 2-601 (§ 2-202), Maine UCCC

Consumer Loans: Me. Stat. tit. 9-A, §§ 2-101 to 2-601 (§ 2-401), Maine UCCC

Consumer Credit Regulation: Maryland

Legal Interest Rate: Md. Const. art. III, § 57; Md. Code Ann., Com. Law § 12-102 (West)

Contract: Md. Code Ann., Com. Law § 12-103 (West)

Judgment: Md. Code Ann., Cts. & Jud. Proc. §§ 11-106, 11-107 (West)

Consumer Loans: Md. Code Ann., Com. Law §§ 12-301 to 12-317 (§ 12-306) (West), Maryland Consumer Loan Law (credit provisions)

Auto Finance: Md. Code Ann., Com. Law §§ 12-601 to 12-636 (§ 12-609) (West), Retail Installment Sales Act

Consumer Credit Regulation: Massachusetts

Legal Interest Rate: Mass. Gen. Laws ch. 107, § 3

Contract: Mass. Gen. Laws ch. 107, § 3

Judgment: Mass. Gen. Laws ch. 231, §§ 6B, 6C, 6H

Criminal Usury Cap: Mass. Gen. Laws ch. 271, § 49

Small Loans: Mass. Gen. Laws ch. 140, §§ 90 and 96; 209 Mass. Code Regs. 26.01

Industrial Banks: Mass. Gen. Laws. ch. 172A, §§ 1 to 15 (§ 9), Banking Company Act (repealed effective March 30, 2005)

Insurance Premium Finance: Mass. Gen. Laws. ch. 255C, § 14

Consumer Credit Regulation: Michigan

Legal Interest Rate: Mich. Comp. Laws § 438.31

Contract: Mich. Comp. Laws § 438.31

Judgment: Mich. Comp. Laws § 600.6013

Criminal Usury Cap: Mich. Comp. Laws § 438.41

Small Loans: Mich. Comp. Laws §§ 493.1 to 493.24 (§ 493.13), Regulatory Loan Act

Regulated Loans: Mich. Comp. Laws §§ 445.1851 to 445.1864 (§ 445.1854), Credit Reform Act

Bank Installment and Credit Card Loans: Mich. Comp. Laws §§ 445.1851 to 445.1864 (§ 445.1854), Credit Reform Act

Consumer Credit Regulation: Minnesota

Legal Interest Rate: Minn. Stat. § 334.01

Contract: Minn. Stat. § 47.59 subdivs. 2, 3, § 334.01

Judgment: Minn. Stat. § 549.09

Small Loans: Minn. Stat. §§ 56.0001 to 56.26 (§ 56.125, open-end; § 56.131), Minn. Regulated Loan Act

Industrial Loans: Minn. Stat. § 53.04, Industrial Loan & Thrift Company Law

Bank and Savings Bank Loans: Minn. Stat. § 48.195, § 47.59

Auto Finance: Minn. Stat. §§ 53C.01 to 53C.14 (53C.09), Motor Vehicle Retail Installment Sales Act; Minn. Stat. § 47.59(4a)

Consumer Credit Regulation: Mississippi

Legal Interest Rate: Miss. Code Ann. § 75-17-1

Contract: Miss. Code Ann. § 75-17-1 (§ 75-17-25, finance charge defined)

Judgment: Miss. Code Ann. § 75-17-7

Small Loans: Miss. Code Ann. § 75-17-21 and Miss. Code Ann. §§ 75-67-101 to 75-67-139, Small Loan Regulatory Law; Miss. Code Ann. §§ 75-67-201 to 75-67-247, Small Loan Privilege Tax Law; Miss. Code Ann. §§75-67-175 to 185, Consumer Alternative Installment Loan Act; Miss. Code Ann. §§ 75-67-601 to 75-67-639, Credit Availability Act

Consumer Credit Regulation: Missouri

Legal Interest Rate: Mo. Rev. Stat. § 408.020, see Mo. Const. art. III, § 44

Contract: Mo. Rev. Stat. §§ 408.030, 408.035, 408.080, 408.455

Judgment: Mo. Rev. Stat. § 408.040

Criminal Usury Cap: Mo. Rev. Stat. § 408.095

Small Loans: Mo. Rev. Stat. §§ 408.100 to 408.213 (§§ 408.100, 408.120, 408.140)

Auto Finance: Mo. Rev. Stat. §§ 365.010 to 365.200 (§§ 365.120 and 365.125), Motor Vehicle Time Sales Law

Consumer Credit Regulation: Montana

Legal Interest Rate: Mont. Code Ann. § 31-1-106

Contract: Mont. Code Ann. § 31-1-107

Judgment: Mont. Code Ann. § 25-9-205

Small Loans: Mont. Code Ann. §§ 32-5-101 to 32-5-409 (§ 32-5-301), Consumer Loan Act

Credit Sales: Mont. Code Ann. §§ 31-1-201 to 31-1-243 (§ 31-1-241), Retail Installment Sales Act

Revolving Credit: Mont. Code Ann. §§ 31-1-201 to 31-1-243 (§ 31-1-241), Retail Installment Sales Act

Installment Loans By Regulated Lenders: Mont. Code Ann. § 31-1-112

Consumer Credit Regulation: Nebraska

Legal Interest Rate: Neb. Rev. Stat. § 45-102

Contract: Neb. Rev. Stat. §§ 45-101.03 and 45-101.04

Judgment: Neb. Rev. Stat. § 45-103

Small Loans: Neb. Rev. Stat. §§ 45-1001 to 45-1070 (§§ 45-1024, 45-1025), Installment Loan Act

Bank Installment Loans and Credit Cards: Neb. Rev. Stat. § 8-820

Installment Sales, All Goods: Neb. Rev. Stat. §§ 45-334 to 45-356 (§ 45-338), Installment Sales Act

Revolving Credit: Neb. Rev. Stat. §§ 45-204 to 45-209 (§ 45-207) (revolving charge agreements)

Consumer Credit Regulation: Nevada

Legal Interest Rate: Nev. Rev. Stat. § 99.040

Contract: Nev. Rev. Stat. § 99.050

Judgment: Nev. Rev. Stat. § 17.130

Small Loans: Nev. Rev. Stat. §§ 675.010 to 675.490 (§ 675.363), Installment Loan and Finance Act

Thrift Company Loans: Nev. Rev. Stat. § 677.730

Installment Sales, All Goods: Nev. Rev. Stat. §§ 97.015 to 97.335 (§ 97.195) (retail installment sales of goods and services)

Consumer Credit Regulation: New Hampshire

Legal Interest Rate: N.H. Rev. Stat. Ann. § 336:1 (consumer loans, N.H. Rev. Stat. Ann. §§ 358-K:1 to 358K:6, exempted)

Contract: N.H. Rev. Stat. Ann. § 336:1 (consumer loans, N.H. Rev. Stat. Ann. §§ 358-K:1 to 358-K:6, exempted)

Judgment: N.H. Rev. Stat. Ann. § 336:1

Small Loans: N.H. Rev. Stat. Ann. §§ 399-A:1 to 399-A:24 (§ 399-A:16), Small Loan Law

Insurance Premium Finance: N.H. Rev. Stat. Ann. §§ 415-B:1 to 415-B:13 (§ 415-B:7) (premium finance companies)

Consumer Credit Regulation: New Jersey

Legal Interest Rate: N.J. Stat. Ann. § 31:1-1 (West)

Contract: N.J. Stat. Ann. §§ 31:1-1 and 31:1-1.1 (West)

Criminal Usury Cap: N.J. Stat. Ann. § 2C:21-19 (West)

Judgment: No statutory provision; N.J. Superior, Tax & Surrogate Courts Civ. Rule 4:42-11

Small Loans: N.J. Stat. Ann. §§ 17:11C-1 to 17:11C-49 (§ 17:11C-32) (West) (licensed lenders)

Bank Installment Loans: N.J. Stat. Ann. § 17:9A-54 (West)

Consumer Credit Regulation: New Mexico

Legal Interest Rate: N.M. Stat. Ann. § 56-8-3

Contract: N.M. Stat. Ann. § 56-8-9

Judgment: N.M. Stat. Ann. § 56-8-4

Criminal Usury Cap: N.M. Stat. Ann. §§ 56-8-9, 56-8-14; N.M. Stat. Ann. §§ 30-43-1 to 30-43-5

Small Loans: N.M. Stat. Ann. §§ 58-15-1 to 58-15-42 (§ 58-15-23), Small Loan Act

Bank Installment Loans: N.M. Stat. Ann. §§ 58-7-1 to 58-7-11, Bank Installment Loan Act

Consumer Credit Regulation: New York

Legal Interest Rate: N.Y. Gen. Oblig. Law § 5-501 (McKinney); N.Y. Banking Law § 14-a (McKinney); N.Y. Comp. Codes R. & Regs. tit. 3, §§ 4.1 to 4.7 (banking board regulations—interest rates)

Criminal Usury Cap: N.Y. Penal Law §§ 190.40 (McKinney)

Contract: N.Y. Gen. Oblig. Law § 5-501 (McKinney); N.Y. Banking Law § 108 (McKinney)

Judgment: N.Y. Civ. Prac. L. & R. § 5004

Small Loans: N.Y. Banking Law §§ 340 to 361 (§ 351) (McKinney), Licensed Lender Law

Consumer Credit Regulation: North Carolina

Legal Interest Rate: N.C. Gen. Stat. § 24-1

Contract: N.C. Gen. Stat. § 24-1.1

Judgment: N.C. Gen. Stat. §§ 24-5, 53-173(c)

Small Loans: N.C. Gen. Stat. §§ 53-164 to 53-191 (§§ 53-173 and 53-176), Consumer Finance Act

Industrial Bank Loans: N.C. Gen. Stat. § 53-141 (industrial banks)

Bank Loans: N.C. Gen. Stat. § 53C-5-1

Savings Bank Installment Loans: N.C. Gen. Stat. §§ 54C-121 to 54C-146

Consumer Credit Regulation: North Dakota

Legal Interest Rate: N.D. Cent. Code § 47-14-05

Contract: N.D. Cent. Code § 47-14-09

Judgment: N.D. Cent. Code § 28-20-34

Criminal Usury Cap: N.D. Cent. Code §§ 47-14-09, 47-14-11 (cf. § 12.1-31-02)

Installment Sales, All Goods: N.D. Cent. Code §§ 51-13-01 to 51-13-08 (§ 51-13-03), Retail Installment Sales Act

Insurance Premium Finance: N.D. Cent. Code § 26.1-20.1-07

Revolving Credit: N.D. Cent. Code §§ 51-14-01 to 51-14-05 (§ 51-14-03) (revolving charge accounts)

Consumer Credit Regulation: Ohio

Legal Interest Rate: Ohio Rev. Code Ann. §§ 1343.01, 1343.03 (West)

Contract: Ohio Rev. Code Ann. §§ 1343.01, 1343.03 (West)

Judgment: Ohio Rev. Code Ann. § 1343.03 (West)

Criminal Usury Cap: Ohio Rev. Code Ann. §§ 2905.21, 2905.22 (West)

Small Loans Including Open-End Loans: Ohio Rev. Code Ann. §§ 1321.01 to 1321.20 (§§ 1321.13, 1321.131 and 1321.16) (West), Small Loan Law

Consumer Credit Regulation: Oklahoma

Legal Interest Rate: Okla. Const. art. 14, § 2; Okla. Stat. tit. 15, § 266

Contract: Okla. Const. art. 14, § 2; Okla. Stat. tit. 15, § 266 (see rates specified in consumer sections of Okla. UCCC)

Judgment: Okla. Stat. tit. 12, §§ 727, 727.1

Criminal Usury Cap: Okla. Stat. tit. 14A, §§ 5-107, 5-301

Small Loans: Okla. Stat. tit. 59, §§ 3150 to 3150.27 (Small Lenders Act)

Consumer Credit Regulation: Oregon

Legal Interest Rate: Or. Rev. Stat. § 82.010

Contract: Or. Rev. Stat. §§ 82.010, 82.025

Judgment: Or. Rev. Stat. § 82.010

Small Loans: Or. Rev. Stat. §§ 725.010 to 725.910 (§§ 725.340, 725.345), Consumer Finance Act

Bank Installment Loans: Or. Rev. Stat. § 708A.255

Auto Finance: Or. Rev. Stat. §§ 83.510 to 83.680 (§§ 83.095, 83.560, 83.565), Motor Vehicle Retail Installment Sales Act

Other Goods Finance: Or. Rev. Stat. §§ 83.010 to 83.190 (§ 83.095) (retail installment sales)