Colorado Interest Rate Laws: Caps, Penalties, and Exemptions

Colorado’s interest rate laws cap most consumer loans at 12% per year for unlicensed lenders, with licensed “supervised lenders” allowed to charge up to 36% under a tiered formula. Payday loans are capped at 36% plus limited fees, credit cards issued by out-of-state national banks generally escape state caps, and charging more than 45% APR is a felony. The rules live primarily in the Uniform Consumer Credit Code (UCCC), with federal law layering on top.

The 12% General Cap

If a lender in Colorado does not hold a supervised lender license from the Attorney General’s Office, the maximum interest rate on a consumer loan is 12% per year.¹ This is the baseline rule of the UCCC and it covers most everyday consumer credit that isn’t extended by a licensed finance company or bank.

Higher Rates for Licensed Supervised Lenders

A lender who obtains a supervised lender license can charge more. For closed-end consumer loans, the lender picks whichever of two methods produces the larger finance charge:²

A tiered rate: 36% per year on the first $1,000 of the unpaid balance, 21% on the portion between $1,000 and $3,000, and 15% on anything above $3,000.
A flat 21% per year on the entire unpaid balance.

The tiered method is not limited to small loans. It applies to loans of any size, and the lender simply calculates both ways and uses the higher result. Small loans usually come out higher under the tiered method because the 36% bracket dominates; larger loans usually come out higher under the flat 21% rate because the 15% top tier would otherwise pull the blended rate down.

For revolving credit accounts issued by supervised lenders, such as open-end lines of credit, the cap is 21% per year. Every finance charge, however it’s calculated, has to be disclosed to the borrower in dollar terms under the federal Truth in Lending Act.³

Payday Loans

Colorado voters passed Proposition 111 in 2018, cutting the maximum rate on payday loans from 45% to 36% per year.⁴ On top of the 36% interest, a payday lender may charge a monthly maintenance fee of up to $7.50 per $100 borrowed, capped at $30 per month, starting 30 days after the loan originates.⁵ Pay the loan off early and the lender must refund a prorated share of the interest.

When There Is No Written Rate

If money is owed but no written agreement sets an interest rate, Colorado law fills the gap at 8% per year, compounded annually.² This is a statutory default for informal debts and oral agreements. It is not a ceiling on what parties can agree to in writing.

Interest After a Court Judgment

Judgments accrue post-judgment interest. For judgments involving damages, the rate is set at two percentage points above the Federal Reserve Bank of Kansas City’s discount rate, rounded to the nearest whole percent, and certified by the Secretary of State each January 1.⁶ For 2026, the certified rate on appealed money judgments is 6%.⁷

If your original loan agreement specifies a post-default rate, that contractual rate generally governs, so long as it stays inside the UCCC caps. Default interest clauses that look punitive rather than compensatory can be struck down as unconscionable.

Credit Cards and Out-of-State Banks

Most credit cards used by Coloradans are issued by national banks based in other states. Under a 1978 Supreme Court decision, a national bank can charge the rate allowed by its home state regardless of where the cardholder lives.⁸ That is why Colorado’s UCCC caps rarely apply to a Visa or Mastercard issued by a large bank. Cards from Colorado-based supervised lenders remain subject to the 21% revolving cap.

Federal law still constrains all issuers on how rates change. A card issuer cannot raise the rate on an existing balance unless you fall more than 60 days behind.⁹ Any rate increase requires at least 45 days’ advance written notice.

The 2023 DIDMCA Opt-Out

In 2023, Colorado enacted House Bill 23-1229, using Section 525 of the Depository Institutions Deregulation and Monetary Control Act to opt out of federal rate exportation for state-chartered banks.⁴ Before the opt-out, a state-chartered bank in another state could lend to Colorado residents at that state’s higher rates. After the opt-out, an out-of-state state-chartered bank lending to a Colorado resident must comply with Colorado’s caps.

Two limits are important. National banks are not affected because their rate authority comes from the National Bank Act, which Colorado cannot override.¹⁰ And general-purpose credit cards whose fees do not exceed 15% of the credit limit are exempt from the opt-out. The law was initially enjoined in federal court, but the Tenth Circuit reversed that injunction in late 2025, clearing the path for enforcement. The charter type of your lender now matters: a loan from a state-chartered online bank has to comply with Colorado’s caps, while the same loan from a national bank may not.

Military Borrowers

Active-duty service members, their spouses, and their dependents get an extra federal ceiling under the Military Lending Act. The MLA caps the annual percentage rate at 36% on most consumer credit, overriding any higher rate a lender could otherwise charge.¹¹ The MLA excludes residential mortgages and purchase-money vehicle loans.

Penalties for Charging Above the Limit

A lender who charges more than the UCCC allows must refund the excess to the borrower.¹² If the overcharge was deliberate or reckless, courts can add penalties. A lender who engaged in usurious lending cannot sue to collect the interest portion of the debt. The Attorney General’s Office can also bring enforcement actions that lead to civil penalties and license revocation.¹

Criminal liability starts at 45% APR. Knowingly charging above that line is criminal usury, a class 6 felony, punishable by up to 18 months in prison and fines up to $100,000. Federal law can also apply: charging at least double the enforceable state limit can trigger RICO liability, carrying penalties of up to 20 years in prison.¹³ Borrowers who believe they were charged unlawful interest can file individual suits or join class actions.

What the UCCC Does Not Cover

Two categories fall outside Colorado’s consumer rate caps in ways borrowers commonly get wrong. Business and commercial loans are not governed by the UCCC, and the 2023 DIDMCA opt-out does not reach them either. Rates on those loans are essentially a matter of negotiation, though the 45% criminal usury threshold still applies regardless of purpose.

First-lien residential mortgages are also preempted from state rate caps under DIDMCA for virtually all lenders, and Colorado’s opt-out does not override that separate mortgage preemption.¹⁰ If you are shopping for a mortgage, the UCCC’s 12% and 21% numbers are not the constraint.

1
Legal Information Institute (LII) at Cornell Law School. 4 CCR 902-1-9 – Supervised Lender License Applications, Surety Bonds, and Changes of Ownership
2
Colorado Revised Statutes. Colorado Revised Statutes Title 5
3
eCFR. 12 CFR Part 226 – Truth in Lending Regulation Z
4
Colorado General Assembly. HB1229 Committee Summary – Attachment B
5
Colorado General Assembly. Initiative 2017-2018 No. 183 – Payday Loan Reform
6
Justia Law. Colorado Code 13-21-101 – Interest on Damages
7
Colorado Judicial Branch. Chief Justice Directive 85-22 – Amended January 2026
8
Legal Information Institute (LII) at Cornell Law School. Marquette National Bank of Minneapolis v. First of Omaha Service Corporation
9
Consumer Financial Protection Bureau. Supplement I to Part 1026 – Official Interpretations – Comment for 1026.55
10
Federal Deposit Insurance Corporation. Federal Interest Rate Authority
11
Office of the Law Revision Counsel. 10 USC 987 – Terms of Consumer Credit Extended to Members and Dependents
12
Justia Law. Colorado Code 5-5-201 – Effect of Excess Charges
13
Office of the Law Revision Counsel. 18 USC Chapter 96 – Racketeer Influenced and Corrupt Organizations