In some states in the country, usury laws are in place that cap or limit the amount of interest that can be charged on certain loans or indebtedness. (Usury is charging a price for credit that exceeds the limits set by law.) For example, the state of Ohio currently limits interest rates to 21% on personal loans made in that state.
However, 26 states have no limit in place on what a bank or credit card company can charge for interest rates on card accounts, according to the American Bankers Association.
Further, credit card companies in 27 states have no limit on what they can charge for annual fees.
There is no federal cap on interest rates that credit card companies can charge. The federal government only requires that whatever rates, fees or terms are set by the credit card companies be disclosed to the consumer in accordance with the federal Truth in Lending Act.
Many states have not passed specific usury limits for most consumer debt, including increases in rates should a person’s credit rating or debt limit change. While there are some restrictions under many states’ law regarding lending practices and interest rates, absent are the traditional usury limits that are seen in many other states in the country today.
To determine if any rate limits exist for a particular state, we suggest referencing the state’s Attorney General website.