Charging a high interest rate can be illegal if it exceeds state-mandated caps, a practice known as usury, though no federal cap exists for most loans. While 45 states cap rates for some loans, exemptions allow national banks and credit card companies to charge higher rates. Penalties for illegal, high-interest loans include civil or criminal charges.
Usury refers to the practice of charging a very high interest rate that is deemed unreasonable. Usury laws set a limit on the amount of interest that can be charged on different kinds of loans.
But yeah, so big picture California says 10%, that's what you can charge on a loan and if you exceed 10%, you have a usury problem.
In California, absent an exception which we discuss in depth below, the maximum allowable interest rate for consumer loans is 10% per year. For non-consumer loans, the interest rate can bear the maximum of whichever is greater between either: i) 10% per annum; or ii) the “federal discount rate” plus 5%.
Usury rates are excessively high interest rates, often illegal and associated with predatory lending. In the U.S., usury rates are defined by state, as there are no federal maximum interest rate guidelines. Usury laws mostly apply to consumer loans and can be bypassed by credit card companies.
There is no federal law that sets maximum interest rates on all consumer loans; rather, rates are restricted at the state level. This means usury laws vary between states.
Report lending abuse to the Consumer Financial Protection Bureau or your state attorney general's office.
Usury is the practice of charging excessively high interest rates on loans, often exceeding legal limits set by jurisdiction. It typically exploits vulnerable borrowers, particularly those with poor credit or limited borrowing options, leading to significant financial strain.
The “Rule of 78 method” refers to an interest/profit calculation method by multiplying the total interest/profit payable over the loan/financing tenure by a fraction, the numerator of which is the number of periods remaining on such financing at the time the calculation is made, and the denominator of which is the sum ...
Trump wants interest rates to fall sharply so the government can borrow more cheaply and Americans can pay lower borrowing costs for new homes, cars or other large purchases, as worries about high costs have soured some voters on his economic management.
The Talmud dwells on Ezekiel's condemnation of charging interest. The Torah and Talmud encourage lending money without interest. But the halakha (Jewish law) that prescribes interest-free loans applies to loans made to other Jews, however not exclusively.
"Usury" is the unlawful act of charging interest on a debt (including discount points, fees and other charges) at a rate greater than what is permitted under any applicable law or exemption from a law.
But depending on the lender, the borrower's credit score and financial situation and other factors, personal loan interest rates can generally range from under 6% to 36%—although higher interest rates aren't unheard of in states where it's allowed.
With the help of the Federal Reserve, US banks are offering loans at higher rates than the interest they pay to depositors and pocketing the difference for themselves.
First Omaha National Bank and subsequent federal laws and regulations have allowed both state and national banks to circumvent many state usury laws by establishing their headquarters in states with more generous usury laws and exporting these more favorable rates to other states where they do business (known as the " ...
1981: The all-time high for mortgage rates
The average mortgage rate in 1981 was 16.63 percent. And that's just the average — some people paid more. For the week of Oct. 9, 1981, mortgage rates averaged 18.63%, the highest weekly rate on record, and almost five times the 2019 annual rate.
The average personal loan interest rate varies dramatically — it can be as low as below 10% or as high as 32%. As of March, 2025, the average unsecured fixed-rate loan with a term of 36 months is 10.75% at credit unions and 12.03% at banks, according to the National Credit Union Administration.
Criminal usury is the issuing of loans at illegal interest rates, usually by organized crime, to persons unable to obtain a loan through legitimate channels. In most large cities, the interest on such a loan is 20 percent, with the interest payable weekly until the principal is repaid.
Predatory lending is a serious crime in California that can affect the lives of the lender as well as the borrower. If you are accused of this offense, we know how to challenge the state's evidence to help demonstrate that you were engaged in legitimate business practices.