510 - Loan interest.
§ 510. Loan interest. (a) General rule.--Interest rates on loans made by a credit union to its members shall not exceed 15% per annum when calculated on the unpaid principal balances. Interest shall be computed for the actual number of days which have elapsed at the time of payment, except that interest for mortgage loans may be paid according to a preauthorized amortization schedule. (b) Procedure for increase in rates.--Before any credit union shall charge any higher rate than that authorized in subsection (a), it shall obtain approval for such higher rate from at least two-thirds of the board of directors of the credit union, and such higher approved rate shall then apply only to loans made by the credit union thereafter. Members shall be notified in writing of the action of the board of directors not later than the next regular mailing of members account statements, which is at least 20 days subsequent to the action of the board. (c) Penalty for overcharge.--The taking, receiving, reserving or charging interest greater than allowed by this section shall be deemed a forfeiture of the entire interest on the loan, except when such overcharge is the result of a clerical error in computation. In case an interest greater than that which is allowed by this section has been paid, the borrower may, within six months after payment, recover from the credit union the entire amount of interest paid, except when such overcharge is the result of a clerical error in computation in which case only the excess interest paid may be recovered. (d) Additional powers of certain insured credit unions.--A credit union insured by a share insurance fund other than the National Credit Union Share Insurance Fund may make any loan authorized by this title, at such interest, finance charge, rate and terms as a credit union insured by the National Credit Union Share Insurance Fund, except that the authority permitted under this subsection shall not apply to the extension of credit for the purchase of goods and services through the issuance and use of credit cards.