The term 'usury' is Latin meaning "excessive interest." Since Sears issued the credit card in the mid-1910s, consumers have struggled with the rates credit cards charge.
Federal Laws
Caps on credit card interest rates are regulated at the state level. Traditionally, the federal government has stayed out of this area although extreme interest rates would fall under federal loan sharking laws.
Supreme Court
In 1978, the Supreme Court heard Marquette vs. First Omaha Service Corporation, and determined that interest rates should be set based on laws in the issuer's home state. As a result, large issuers, such as Citibank, relocated to states that are more lenient.
Bankruptcy
In 2005, revised bankruptcy laws went further to protect credit issuers by restricting the right of bankruptcy judges to negate debt.
Disclosure
The Truth in Lending Act (1968) enforces full disclosure of rates and fees but does not put caps on interest rates.
Caps
Currently, Hawaii, Missouri, and the District of Columbia have the highest caps on interest rates ranging from 22 to 24%.
Rates
Card issuers have always used personal credit scores to determine interest rates charged to the individual consumer, however, as the economy falters, they are now beginning to look at who holds the mortgage and stability of employers.
Free Market
The best protection for consumers is to read the fine print on credit card contracts and to be selective about which cards they carry.
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