I have read the Bankers' Hotline that I received today and have a question about the usury limits that was mentioned in the questions and answers. My Bank also imposes a daily overdraft charge. I would like more information concerning the usury limits and any violations that might occur because of this daily charge.

Usury is defined as the lending of money at an unreasonable rate of interest. The limits vary from state to state. I would check state laws on this issue. However, I don't see how usury applies to overdraft charges on deposit accounts. Maybe someone out there can make the connection.

This is my opinion.

I haven't read the article yet, but as to AD's question, the state law you referred to will not only determine the usury rate, but also what constitutes a "loan" subject to those rates.

In some cases you may find that an overdraft with a flat fee for processing is not a loan, but if there is a daily fee, it could be determined that it is a time-price differential and therefore interest, subject to usury.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.