Charging interest on interest

We are launching the Line of Credit product and are designing an interest calculation process. We will offer a flat 15% ARP line with No Fees, No Charges.

Question: Are we allowed to charge interest on interest? If the customer did not make a minimum monthly payment - did not pay the interest charged for the past month, then in the following month, are we allowed to charge interest not only on outstanding but also on this unpaid interest from the previous period?

State law, if any, governs what you can and can not charge.

Thanks! Was trying to find it in Federal regulation. Launching for NY state only right now

Questions dealing with legal limits on fees, interest rates, and accrual methods should be directed to the bank's legal counsel. The answers will come from counsel's understanding of each state's statutory and case laws. If you have a roll-out plan for multiple states, you should provide counsel with a list of those states and ask for a comprehensive response regarding the state laws in all of your planned market area.