Interest Rate on Deposits

The interest rate for the deposit with the lender providing a Missouri Linked Deposit loan is based on a formula set by state law. The interest rate is set off of the Market Rate, which is computed based on the average CD rate quoted by Missouri lenders for the comparable term. When the Market Rate is above 5%, Treasurer Zweifel may reduce the yield on the deposit to the lender by as much as 3%. When the Market Rate is below 5%, Treasurer Zweifel may reduce the yield by as much as 60%.

State law requires that the amount of the interest rate reduction must be passed on to the loan applicant for a Missouri Linked Deposit Program loan.

Interest Owed for Early Principal Payments or Other Situations

The below-market interest rates described above apply only to the amount actually placed. For lines of credit or other types of loans, in which the amount of funds actually placed and being used by the client may be less than the amount of the Missouri Linked Deposit Program loan, the lender shall pay the state the usual Market Rate on any portion of a deposit held for any period when there is no corresponding Missouri Linked Deposit Program loan outstanding. Such a situation may arise as the applicant makes principal payments, for instance.

At the anniversary date of each Missouri Linked Deposit Program loan, the lender is required to calculate the loan dollar days for each loan by completing a "Deposit Data Summary" report. Any interest due to the state at the usual market rate is then required to be remitted. A spreadsheet, which can be used to track any interest due, can be downloaded below. Please contact Treasurer Zweifel’s office for the actual interest rate factor.

Interest Rate on Loans

The loan rate provided to the borrower for a Missouri Linked Deposit loan is set by state regulation and is dependent on the size of the Missouri Linked Deposit Program loan. For loans under $100,000, the loan rate is calculated as: sum of the current Prime Rate plus 1.50% multiplied by 75%. For loans over $100,000, the loan rate is set based on a certification by the lender of the normal lending rate that would have been offered to the applicant. This lending rate is multiplied by 70% to determine the new loan-ceiling rate for the Missouri Linked Deposit Program loan applicant.