CHAPTER 54-3
INTEREST AND USURY
54-3-1 Interest defined.
54-3-1.1 Rate of interest set by written agreement--No maximum or usury restriction.
54-3-2 Loan of money--Presumption as to interest.
54-3-3 Annual rate of interest where not specified.
54-3-4 Maximum rate of interest where no rate specified--Commencement where date not specified.
54-3-5 Interest on moneys after they become due--Exception for express contracts or interest rate on bill, statement, or invoice--Limitation on interest rate.
54-3-5.1 Interest on judgments, statutory liens and inverse condemnations.
54-3-6 Legal rate of interest stipulated by contract after breach.
54-3-7 54-3-7. Repealed by SL 1981, ch 350, § 1.
54-3-7.1 54-3-7.1. Repealed by SL 1982, ch 341, § 4.
54-3-7.2 54-3-7.2. Repealed by SL 1972, ch 258.
54-3-8 Interest on loan--Advance deduction.
54-3-9 54-3-9. Repealed by SL 1982, ch 341, § 7.
54-3-10 54-3-10. Repealed by SL 1975, ch 298.
54-3-11 54-3-11. Repealed by SL 1976, ch 309, § 7.
54-3-12 54-3-12. Repealed by SL 1982, ch 341, § 8.
54-3-13 Regulated lenders exempt from interest rate limitations and usury statutes.
54-3-14 Regulated lenders defined.
54-3-15 Exemption from federal preemption of state usury laws.
54-3-16 Official state interest rates.
54-3-17 Recommendations for amendment of official rates.
54-3-1. Interest defined.
Interest is the compensation allowed by law for the use, or forbearance, or detention of money or its equivalent, including without limitation, points, loan origination fees, credit service or carrying charges, charges for unanticipated late payments, and any other charges, direct or indirect, as an incident to or as a condition of the extension of credit. These charges do not include charges made by a third party.
Source: CivC 1877, § 1095; CL 1887, § 3718; RCivC 1903, § 1414; RC 1919, § 1037; SDC 1939, § 38.0103; SL 1987, ch 360, § 3.
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 is a document in writing, whether in physical or electronic form, in which the parties have demonstrated their agreement to the terms and conditions of an extension of credit, including the rate of interest. 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; SL 2016, ch 229, § 1.
54-3-2. Loan of money--Presumption as to interest.
Whenever a loan of money is made it is presumed to be made upon interest, unless it is otherwise expressly stipulated at the time in writing.
Source: CivC 1877, § 1094; CL 1887, § 3717; RCivC 1903, § 1413; RC 1919, § 1036; SDC 1939, § 38.0104.
54-3-3. Annual rate of interest where not specified.
When a rate of interest is prescribed by a law or contract, without specifying the period of time by which such rate is to be calculated, it is to be deemed an annual rate.
Source: CivC 1877, § 1096; CL 1887, § 3719; RCivC 1903, § 1415; RC 1919, § 1038; SDC 1939, § 38.0107.
54-3-4. Maximum rate of interest where no rate specified--Commencement where date not specified.
Under an obligation to pay interest, no rate being specified, interest is payable from date of incurrence of debt, unless the parties have otherwise agreed, at a maximum rate of the Category C rate of interest as established in § 54-3-16, and in the like proportion for a longer or shorter term. In the computation of interest for less than a year, three hundred sixty days are deemed to constitute a year.
Source: CivC 1877, § 1097; CL 1887, § 3720; RCivC 1903, § 1416; RC 1919, § 1039; SL 1933, ch 123, § 1; SDC 1939, § 38.0108; SL 1980, ch 336, § 1; SL 1982, ch 341, § 2; SL 1984, ch 319, § 34.
54-3-5. Interest on moneys after they become due--Exception for express contracts or interest rate on bill, statement, or invoice--Limitation on interest rate.
Unless there is an express contract in writing fixing a different rate or the interest rate clearly appears on the bill, statement, or invoice, interest is payable on all moneys at the Category F rate of interest as established in § 54-3-16 after they become due on any instrument of writing, and on moneys lent, or due on any settlement of accounts, from the day on which the balance is ascertained, and on moneys received to the use of another and detained from that other. Any interest rate appearing on a bill, statement, or invoice may not exceed eighteen percent.
Source: SDC 1939, § 38.0109; SL 1972, ch 257; SL 1975, ch 297; SL 1980, ch 336, § 2; SL 1981, ch 348; SL 1984, ch 319, § 35; SL 1994, ch 366, § 2; SL 2005, ch 255, § 1.
54-3-5.1. Interest on judgments, statutory liens and inverse condemnations.
Interest is payable on all judgments and statutory liens, exclusive of real estate mortgages and security agreements under Title 57A, and exclusive of support debts or judgments under § 25-7A-14, at the Category B rate of interest as established in § 54-3-16 from and after the date of judgment and date of filing statutory lien. On all judgments arising from inverse condemnation actions, interest is payable at the Category A rate of interest as established by § 54-3-16.
Source: SL 1981, ch 349, §§ 1, 3; SL 1982, ch 341, § 3; SL 1983, ch 361; SL 1984, ch 319, § 31; SL 1986, ch 218, § 69; SL 2003, ch 242, § 1.
54-3-6. Legal rate of interest stipulated by contract after breach.
Any legal rate of interest, stipulated by a contract, remains chargeable after a breach thereof, as before, until the contract is superseded by a verdict or other new obligation.
Source: CivC 1877, § 1102; CL 1887, § 3725; RCivC 1903, § 1421; RC 1919, § 1045; SDC 1939, § 38.0106.
54-3-8. Interest on loan--Advance deduction.
The interest which would become due at the end of the term for which a loan is made, not exceeding one year's interest in all, may be deducted from the loan in advance if the parties thus agree.
Source: CivC 1877, § 1099; CL 1887, § 3722; RCivC 1903, § 1418; RC 1919, § 1043; SDC 1939, § 38.0105.
54-3-13. Regulated lenders exempt from interest rate limitations and usury statutes.
Regulated lenders are exempt from all limitations on the rate of interest which they may charge and are further exempt from the operation and effect of all usury statutes, except as is otherwise provided in § 54-3-14. Regulated lenders and their assignees are further exempt from the prohibition, operation, and effect of § 15-17-39, and regulated lenders and their assignees may recover reasonable attorney's fees in the case of default of payment if provided for in the note, bond, mortgage, or other evidence of debt.
Source: SL 1980, ch 335, § 2; SL 1996, ch 283.
54-3-14. Regulated lenders defined.
The term, regulated lenders, as used in § 54-3-13 means:
(1) A bank organized pursuant to chapter 51A-1, et seq.;
(2) A bank organized pursuant to 12 U.S.C. § 21;
(3) A trust company organized pursuant to chapter 51A-6A;
(4) A savings and loan association organized pursuant to chapter 52-1, et seq.;
(5) A savings and loan association organized pursuant to 12 U.S.C. § 1464;
(6) Any wholly owned subsidiary of a state or federal bank or savings and loan association which subsidiary is subject to examination by the comptroller of the currency, or the federal reserve system, or the South Dakota Division of Banking, or the federal home loan bank board and which subsidiary has been approved by the United States secretary of housing and urban development for participation in any mortgage insurance program under the National Housing Act;
(7) A federal land bank organized pursuant to 12 U.S.C. § 2011;
(8) A federal land bank association organized pursuant to 12 U.S.C. § 2031;
(9) A production credit association organized pursuant to 12 U.S.C. § 2091;
(10) A federal intermediate credit bank organized pursuant to 12 U.S.C. § 2071;
(11) An agricultural credit corporation or livestock loan company or its affiliate, the principal business of which corporation is the extension of short and intermediate term credit to farmers and ranchers;
(12) A federal credit union organized pursuant to 12 U.S.C. § 1753;
(13) A federal financing bank organized pursuant to 12 U.S.C. § 2283;
(14) A federal home loan bank organized pursuant to 12 U.S.C. § 1423, et seq.;
(15) A national consumer cooperative bank organized pursuant to 12 U.S.C. § 3011;
(16) A bank for cooperatives organized pursuant to 12 U.S.C. § 2121;
(17) Bank holding companies organized pursuant to 12 U.S.C. § 1841, et seq.;
(18) National Homeownership Foundation organized pursuant to 12 U.S.C. § 1701y;
(19) Farmers Home Administration as provided by 7 U.S.C. § 1981;
(20) Small Business Administration as provided by 15 U.S.C. § 633;
(21) Government National Mortgage Association and Federal National Mortgage Association as provided by 12 U.S.C. § 1717;
(22) South Dakota Housing Development Authority as provided by chapter 11-11;
(23) Insurance companies, whether domestic or foreign, authorized to do business in this state, and which as a part of their business engage in mortgage lending in this state. However, § 54-3-13 does not exempt insurance companies from the provisions of § 58-15-15.8; or
(24) Any wholly owned service corporation subsidiary of a domestic or foreign insurance company, authorized to do business in this state, and which subsidiary is subject to examination by the same insurance examiners as the parent company.
Source: SL 1980, ch 335, § 1; SL 1982, ch 342; SL 2017, ch 221 (Initiated Measure 21), § 1, eff. Nov. 16, 2016; SL 2021, ch 203, § 28.
54-3-15. Exemption from federal preemption of state usury laws.
The provisions of 12 U.S.C. 1735f-7, 12 U.S.C. 86a and 15 U.S.C. 687 in effect on December 31, 1980, which preempt state usury laws, do not apply to loans made in the state of South Dakota.
Source: SL 1981, ch 351.
54-3-16. Official state interest rates.
The official state interest rates, as referenced throughout the South Dakota Codified Laws, are as follows:
(1) Category A rate of interest is four and one-half percent per year;
(2) Category B rate of interest is ten percent per year;
(3) Category C rate of interest is twelve percent per year;
(4) Category D rate of interest is one percent per month or fraction thereof;
(5) Category E rate of interest is four percent per year;
(6) Category F rate of interest is fifteen percent per year; and
(7) Category G rate of interest is five-sixth percent per month or fraction thereof.
Source: SL 1984, ch 319, § 1; SL 1987, ch 362; SL 1994, ch 366, § 1; SL 2000, ch 226, § 1.
54-3-17. Recommendations for amendment of official rates.
The Division of Banking shall annually review current interest rates, which review shall take into account the national rate of inflation and the prime lending rate as well as other indices division personnel deem proper, and, if necessary, shall recommend amendments to § 54-3-16 to the Legislature during regular session.
Source: SL 1984, ch 319, § 2.
