Maybe you’re in a bit of a financial bind or maybe you need to make a big purchase or investment. (Or maybe you just like the sound of having a little extra cash to spend.) Either way, you might be wondering about the interest rate you’ll be charged on a credit card or a loan.
We all know a high interest rate can get us into more money trouble if we’re not careful about using credit responsibly. So are there legal limits on the amount of interest that a creditor can charge in the Aloha State? This is a quick introduction to interest rates laws in Hawaii.
Interest Rates Laws
The limits set by state interest rate laws can vary depending on the type of credit involved, or whether the money is part of a loan or legal judgment. But the intent is the same: to help consumers avoid crippling debt and to deter predatory lenders by prohibiting usury and restricting the amount of interest a creditor can charge. Hawaii sets the interest rate absent a written contract at the prime rate posted in the Wall Street Journal for that quarter, but no more than 10%.
Interest Rates Laws in Hawaii
Hawaii's interest rate statutes are listed below.
| Code Section | Hawaii Revised Statutes 478-1, et seq.: Interest and Usury |
| Legal Maximum Rate of Interest | 10% H.R.S. 478-2 |
| Penalty for Usury (Unlawful Interest Rate) | Creditor may recover principal only; Debtor recovers costs; Creditor fined up to $250 and/or prison up to 1 year H.R.S. 478-5, 6 |
| Interest Rates on Judgments | 10% on judgment for any civil suit H.R.S. 478-3 |
| Exceptions | - |
Obviously it is easier said than done, but the simplest way to prevent a high interest rate is to avoid credit card debt before it begins. If you have a credit card, use the card responsibly and pay off the entire balance quickly -- every month, if you can. If you are already in significant credit card debt, there may be consumer protections under federal law that can help you.
Related Resources for Hawaii Interest Rate Laws
Complex terms of service for credit cards and loans don’t make it easy to figure out an interest rate, much less if it abides by state laws. You can consult with an experienced Hawaii consumer protection attorney in your area if you would like legal help with an interest rate matter. And FindLaw’s section on Usury Laws and Limits on Credit Card Interest Rates can provide you with further reading and resources on this topic.
