The Tennessee Department of Financial Institutions, under the leadership of Commissioner Greg Gonzales, has announced a new maximum effective formula interest rate. As of May 14, 2024, the rate is set at 12.50 percent per annum. This adjustment comes as a direct application of the state’s regulatory framework, which allows for an interest rate that is 4 percent above the weekly average prime loan rate. The basis for this calculation, the prime loan rate, was reported by the Federal Reserve to be 8.50 percent on May 13, 2024.
Commissioner Gonzales explained that this rate will remain in place until there is a change in the average prime loan rate as announced by the Federal Reserve Bank. This approach to determining the formula rate of interest is in accordance with Chapter 464, Public Acts of 1983. This piece of legislation mandates that the commissioner of Financial Institutions in Tennessee must announce the formula rate of interest on a weekly basis.
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This announcement is a key piece of information for both consumers and financial institutions in Tennessee, as it affects loan agreements, savings, and investment strategies. For further inquiries, the public can reach out to Alica Owen, the Public Information Officer at the Tennessee Department of Financial Institutions, at (615) 289-4738.
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