Do usury laws not apply with these credit cards?

http://finance.yahoo.com/banking-budgeting/article...

i remember back when i took economics last year, we talked about usury laws in credit and i thought the max interest that can be charged on someone's payment was around 30% not 59.9%? so please someone explain how this can be?

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  • 10 years ago
    Favorite Answer

    That article is not entirely accurate - the 59.9% interest rate is taking into account all of the fees associated with the card - not the interest charged on purchases.

    Usury laws have evolved dramatically over the last 20 years - it used to be that credit card interest was tax deductible and card issuers could not charge over 18% (ah the good ole days!). Now there is no tax break and banks have separate rules. In fact, due to high inflation, in 1980, the federal government passed a special law which allowed national banks (the ones that have the word "national" or the term "N.A." in their name, and savings banks that are federally chartered) to ignore state usury limits and pegged the rate of interest at a certain number of points above the federal reserve discount rate. In addition, specially chartered organizations like small loan companies and installment plan sellers (like car financing companies) have their own rules.

    Source(s): Secrets to Improve Your Credit Score - http://secretstoimproveyourcredit.blogspot.com/
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  • CatDad
    Lv 7
    10 years ago

    Usury laws in the USA were basically gutted in the USA by a 1978 Supreme Court decision which mandated that every state must follow the interest rate laws of other states. South Dakota doe not set usury ceilings....and most credit card companies are incorporated in SD (or Delaware). There is therefore no usury limit.

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