INTEREST 
1. Legal Rate—The legal rate of interest for a national bank is 
governed by the laws of the state in which the bank is located. 
Where the laws of a state fix a different interest rate for banks of 
issue organized under state laws, national banks are allowed the same 
rate. If the state laws do not fix an interest limit, a national bank 
may charge a rate not exceeding 7 per cent. Such interest may be 
taken in advance. 
The purchase, discount, or sale of a bona fide bill of exchange, 
payable at a place other than the place of such purchase, discount or 
sale, at not more than the current rate of exchange for sight drafts in 
addition to the interest, shall not be considered as taking a greater 
rate of interest. 
A national bank in making contracts for interest on loans is placed 
on an equal footing with the citizens and with the banks organized 
under the laws of the state in which it is located. The national bank 
may contract for, charge, and receive a rate of interest on a loan made 
to a resident of another state, at a rate allowed by the laws of that 
state, even though such rate is greater than that prescribed by or 
expressed in the laws of the state in which the bank is located, 
provided 
a) That the note or contract evidencing the loan is made payable or is to be 
performed in the state authorizing the greater rate, 
(b) And that the transaction is made in good faith. 
2. On Deposits—The National Bank Act, as amended February 25, 
1927, authorizes a national bank to operate a savings department, 
and to pay interest on saving deposits with limitations as to the rates 
to be paid. The following excerpt from the Act bears upon this point: 
National banks “may continue hereafter as heretofore to receive time and 
savings deposits and to pay interest on the same, but the rate of interest 
which such banks may pay upon such time deposits or upon savings or 
other deposits shall not exceed the maximum rate authorized by law to be 
paid upon such deposits by State banks or trust companies organized under 
the laws of the State wherein such national banking association is located.” 
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