South Dakota Usury Laws
Update As pointed out by a user, and as is obvious when looking at the headquarters of major credit card companies, there is no usury limit in South Dakota (that's why those credit cards can have such high rates). The Statute:
"54-3-1.1. Rate of interest set by written agreement--No maximum or usury restriction. Unless a maximum interest rate or charge is specifically established elsewhere in the code, there is no maximum interest rate or charge, or usury rate restriction between or among persons, corporations, limited liability companies, estates, fiduciaries, associations, or any other entities if they establish the interest rate or charge by written agreement. A written agreement includes the contract created by § 54-11-9.
Source: SL 1982, ch 341, § 1; SL 1987, ch 360, § 4; SL 1994, ch 351, § 147."
South Dakota has established a legal interest rate of 15%. Beyond this fact, there is no usury limitation of cap 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.
When it comes to interest rates on judgments in South Dakota, the interest rate is 12% (actually lower than the legal interest rates on personal loans).
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. Moreover, there are interest rate schemes that pertain to commercial loans as well as to financing relating to the purchases of goods with a value beyond $500 (pursuant to the terms and conditions of the Uniform Commercial Code in South Dakota).
When it comes to resolving issues pertaining to personal loan agreements than carry an interest rate beyond the 15% level, there appears to be something of two prong approach in South Dakota. First of all, if an individual or commercial enterprise appears to be engaging in a pattern or practice of extending loans to individuals with interest rates above and beyond the 15% level, courts likely will strike down loan agreements from such individuals or companies as being illegal. There will be no enforcement of the loan agreement whatsoever because of the interest rate beyond the 15% level -- and because of the repetitive practice of charging such interest rates.
On the other hand, if a loan agreement containing an interest rate above 15% is the result of error or is not part of an ongoing and more extensive practice, it is likely that a court will refashion the loan agreement to correct the interest rate downward to an appropriate level. Otherwise the personal loan agreement will remain in force and in effect.
The statutes and regulations governing interest rates and lending practices in South Dakota can be found in South Dakota Codified Laws at Title 20.
The materials in this article are provided for informational purposes only. If you have any questions about the lending laws in South Dakota, please consult a lawyer. Additionally, we do make every effort to keep the information in this article current. However, the lending laws in South Dakota do change.