What Is The Highest Legal Interest Rate On A Credit Card In The U S

The maximum interest rate on your credit cards is often in the hands of your creditors.

Usury, according to Usurylaw.com, "is defined as the act of lending money at an unreasonably high interest rate." State usury laws determine the legal maximum interest rate for loans issued within each state. However, credit card issuers have found loopholes in the system.

State Limits

State usury limits vary from 5 percent (Wisconsin) to 30 percent (New Jersey), while a few states impose no usury limits on loans. Usurylaw.com provides a database listing each state's interest rate limits and usury laws. Some states, including Wisconsin, allow interest rates in excess of usury limits on loans that are made from a corporation or bank. In other states, like Pennsylvania where usury laws cap interest rates at 6 percent with the only exception is for loans made to corporations or for non-residential real estate.

Considerations

Even though a few states severely limit the rate of interest allowed on loans, including credit card loans, out-of-state credit card companies are able to charge interest rates higher than state limits as result of the 1978 U.S. Supreme Court decision in Marquette National Bank vs. First of Omaha Service Corp. The court's decision allows credit card companies to charge consumers in any state at the highest legal interest rate allowed by usury laws in the state where the card company is based.

Effects

According to Boston.com, "Many credit card companies moved to states with lenient rules such as Delaware and South Dakota." South Dakota, in particular, has no usury limits and is home to several major credit card companies as a result.

Warning

In some cases, your interest rate may increase even if you pay your card on time and stay within credit limits. Depending on where your credit card company is based, there may be no legal limit to your interest rate.

Federal Intervention

The Credit Card Accountability Responsibility and Disclosure Act of 2009, while not placing federal limits on interest rates, revises the terms under which rates may be increased, according to FDIC Consumer News.

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