Do usury laws – laws designed to protect consumers against high interest rates still exist?
Usury laws are state laws designed to make sure credit card companies don’t charge interest rates that exceed the limits set by the state. But they offer less protection than you might think. Some 26 states have no limit on what bank credit card issuers can charge. Others have very limited protection. Banks have shifted their headquarters to states that have no limit or very high limits on interest rate charges. It’s a trend that started in the 1980s and continues today. As a result of this shifting of locations, states have raised the limits on their usury laws. For example, D.C.’s cap on interest rates is 24 percent. Of course, most consumers don’t pay interest rates that are this high, mainly because of competition. And, if you have a good credit rating you can get cards at much lower interest rates. What can trigger credit card interest rates of 20 percent to 30 percent interest? Believe it or not, using your credit card can trigger an increase. A WTOP listener who recently returne
