In a move that directly affects borrowers’ pockets across Tennessee, Commissioner Greg Gonzales has announced a significant interest rate update. According to a release from the Tennessee Department of Financial Institutions, the new maximum effective formula rate of interest is set at 11.50 percent per annum, a number that Gonzales confirmed will stand until the Federal Reserve adjusts the prime loan rate.
Setting the stage for the state’s financial institutions, the rate derives its number from a 4 percent addition to the weekly average prime loan rate, which the Fed pegged at 7.50 percent as of February 18, 2025; this rate strategy follows the mandate outlined by Chapter 464, Public Acts of 1983, which demands the commissioner’s weekly announcement of such adjustments, it’s a task that keeps Gonzales on his toes as the economic climate shifts.
Locals engaged with financial planning and interest-sensitive endeavors will have an eye on the Fed’s future announcements, as any change therein will cascade down to the state’s rates, as reiterated by Commissioner Gonzales whose role ensures compliance with the decades-old legislative requirements. It’s a dynamic landscape where a mere fraction of a percentage point swing in the prime rate can ripple through the economic pond affecting loans, credit lines, and potentially the broader economy of Tennessee…