Regardless of statutory limits on interest rates, consumers regularly agree to waive those limits and pay higher rates by clicking "I agree" online or signing a printed contract. Still, most states have so-called "usury" laws on the books, intended to prevent exorbitant rates.
South Dakota interest rate laws generally defer to contract law. One exception is a 12 percent limit on judgments. Generally speaking, South Dakota's interest rate limit is 15 percent. Beyond this fact, there is no usury limitation per se in the State of South Dakota.. There are some limitations on consumer loans below $5,000 when it comes to the manner in which they can be made and in regard to related matters. However, and again, there are no usury limitations per se.
In addition to these regulations, there are separate provisions that deal with interest rates on loans from state chartered institutions including banks, savings and loans, and credit unions.
How Do Creditors Get Around Statutory Interest Rate Limits?
Consumers may be required to pay higher interest rates if agreeing to do so is a condition of getting a credit card or loan. Additionally, depending on the terms of the contract, borrowers often agree to give credit card issuers the green light to raise rates at a later date. This may be a lengthy paper contract for a car loan or a simple click of the mouse when agreeing to the terms of a credit card application.
The best way to avoid extremely high interest rates is to do your best to avoid credit card debt in the first place. This is certainly easier said than done. Even if you do have credit debt, you still have some consumer protections under federal law as a consumer. See Consumer Protection Resources for more information.
| Statute | 54-3-1.1 |
| Legal Maximum Rate of Interest | Absent agreement, 15 percent (§54-3-4) |
| Penalty for Usury (Unlawful Interest Rate) | Penalties repealed July 1982 |
| Interest Rates on Judgments | 12 percent (§54-3-5.1) |
| Exceptions | Real estate mortgages; Uniform Credit Code security agreements; revolving charge accounts (§54-11-5); regulated lenders §(54-3-13) |
Note: State laws are constantly changing -- contact a South Dakota consumer protection attorney or conduct your own legal research to verify the state law(s) you are researching.
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