Those credit card offers we all get in the mail or online sound so tempting, don’t they?  Whether you like the idea of having a little extra shopping cash, or you need a new credit card to pay a bill in a pinch, you can get into some sticky situations using credit cards. This is especially true if the interest you’re paying on your purchases is soaring. Fortunately, the Great Lake State has some consumer protections when it comes to interest rates. This is a brief overview of interest rates laws in Michigan.
Interest Rate Laws
While most states set limits on how much interest a creditor may charge, consumers regularly waive these limits when agreeing to the terms of a credit card or other loan. Therefore, state interest rate laws typically have no bearing on the actual rates paid by borrowers. Regardless, Michigan interest rate laws impose a 5 percent limit on interest rates, or 7 percent with a written agreement.
Interest Rate Laws in Michigan
Read about Michigan's interest rate laws in the following table.
| Legal Maximum Rate of Interest | 5%; maximum rate with written agreement: 7% §438.31 |
| Penalty for Usury (Unlawful Interest Rate) | Loss of all interest, official fees, delinquency or collection charge, attorney's fees or court costs (§438.32) |
| Interest Rates on Judgments | Rate of interest equal to 1% plus the average interest paid at auctions of 5-yr. U.S. treasury notes during the 6 months preceding July 1 and January 1 (§600.6013) |
| Exceptions | Small loans (§493.1); credit union loans (§490.14) |
While it is certainly easier said than done, perhaps the best way to avoid those high interest rates is to avoid credit card debt in the first place. But that’s not always possible. If you do have accumulated some credit debt, you may still have some consumer protections under federal law. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (also known as the Credit CARD Act) puts limits on APR increases, requires certain disclosures from credit card companies, and regulates how companies process credit card payments.
Michigan Interest Rates Laws: Related Resources
Sorting through those long credit card terms of service agreements and trying to figure out how the law applies can be baffling. You can visit FindLaw’s section on usury laws and limits on credit card interest rates to learn more about this topic. If you would like legal help on an existing credit card case, you can contact a Michigan consumer protection attorney.
