Usury involves charging exploitative interest rates above the legal limits set by individual states.
Jump to insightLenders that violate usury laws may face significant consequences, including fines, fees and jail time.
Jump to insightLegal interest caps vary significantly by state, with maximum rates ranging from 8% to 30%.
Jump to insightIf you think you’ve been charged a usurious interest rate, contact your state’s attorney general or file a complaint with the Consumer Financial Protection Bureau (CFPB).
Jump to insightHow usury works
Today, usury is defined as the act of charging an exploitatively high interest rate. These unreasonable rates can make it practically impossible for some borrowers to get out of debt. Usury laws are often discussed in the context of payday loans, but they also apply to other types of consumer debt offered by banks and other traditional lenders.
Payday loans are a common example of potentially predatory lending. These loans — outlawed in some states — typically let you borrow money for two to four weeks. They come with annual percentage rates (APRs) much higher than those of a typical personal loan, creating a difficult-to-break borrowing cycle.
» MORE: Payday loans vs. personal loans
History and evolution of usury
Usury was originally defined as charging any interest at all on a loan. Regulation of the practice has existed for thousands of years, with some of the earliest written lending rules appearing in the Code of Hammurabi. That ancient text set maximum rates for grain and silver loans, and later Greek and Roman societies also imposed interest limits.
Religious and moral influence
For centuries, lending was framed as a moral issue rather than an economic one. Major religious doctrines reinforced the belief that charging interest was immoral:
- The Old Testament: Warned against taking interest from the poor.
- Medieval Christianity: The church banned interest entirely for several centuries.
- Islamic law (sharia): This tradition still prohibits usury today.
These religious doctrines slowed the development of commercial credit. But as trade expanded in Europe, governments shifted from banning interest to setting rate caps. This transition enabled regulated lending aimed at preventing borrower exploitation.
Modern legal development in the U.S.
The early American colonies initially adopted English-style interest rate limits. By the mid-1800s, most states had formal usury statutes.
Several key legal milestones shaped our modern landscape:
- 1864 National Bank Act: This allowed national banks to follow the rate limits of their home state, even when lending nationwide.
- 1978 Marquette ruling: This Supreme Court decision allowed credit card lenders to “export” higher interest rates across state lines.
- 1980s to 1990s deregulation: During this era, many states created exceptions to usury laws for payday and installment lenders.
Today, usury remains regulated at the state level, with wide variation in legal rate caps and exemptions for specific loan types.
Usury laws and predatory lending
Usury laws are designed to protect you from predatory lending, which occurs when a lender imposes unfair or abusive loan terms. Predatory lenders often target individuals with very limited funds or those unaware of their legal rights. In some cases, they may even require collateral to secure the loan, putting your personal assets at risk.
Is usury a crime?
Usury can be a crime if a lender’s rate exceeds the state's set legal maximum. While there is no federal law that sets a universal cap on interest rates in the U.S., several federal laws dictate transparency and specific limits:
- Under the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, lenders must provide at least 45 days’ notice before a change in interest rates or fees.
- The Truth in Lending Act (TILA) requires lenders to disclose the full cost of a loan, including the APR, helping you identify usurious rates.
- The Fair Debt Collection Practices Act (FDCPA) protects you from unfair debt collection practices. For example, a collector trying to recoup interest or fees that exceed what’s allowed by law or your contract may violate the FDCPA.
Lenders found breaking these laws face serious consequences. They may be forced to return the borrowed money plus interest, pay significant fines or even face jail time.
Usurious loan rates by state
Because usury laws are established at the state level, the definition of an "unreasonable" rate varies widely. These laws often “set the maximum rate of interest on a loan at 16% per annum before being considered usury,” but “some states allow a maximum of 20% to 30%, depending upon the industry,” said David Reischer, consumer attorney and CEO of LegalAdvice.com.
"Some states allow a maximum of 20% to 30%, depending on the industry.”
Below are a few examples illustrating these usurious loan rate variations. You can find information about your state’s specific rules online.
| State | General usury limit | Specific conditions |
|---|---|---|
| Minnesota | 8% | One of the lowest rates in the U.S. |
| New York | 16% to 25% | 16% for unlicensed lenders; 25% for licensed lenders (larger loans or those given to businesses are subject to different limits) |
| Florida | 18% | Applies to loans under $500,000* |
| New Jersey | 30% | A relatively high individual rate cap |
Even though this fee is capped at 10% of the principal (plus a $5 verification fee), the short term of the loan can result in an APR equivalent to over 500%.
» EXPLORE: Interest rates and how they work
Usury exemptions and federal protections
Not all loans are subject to state usury caps, and many financial institutions are exempt because they follow federal regulations instead. Common exemptions include:
- National banks: Financial institutions with a federal charter “are often exempt from state usury laws, as they are [instead] subject to federal regulations,” explained Min Hwan Ahn, an attorney in Philadelphia.
- Credit unions: Federally insured credit unions are typically exempt because the National Credit Union Administration (NCUA) currently sets their maximum limits.
- Military members: The Military Lending Act caps consumer debt rates at 36% for active-duty service members, while the Servicemembers Civil Relief Act (SCRA) limits interest on debt incurred before active duty to 6%.
- Business loans and mortgages: Depending on the state, some business loans or mortgages may be exempt from standard usury limits, said Ahn.
Besides these federal exemptions, some states also have their own usury exemptions, said Andrew Pickett, a trial attorney and the owner of Andrew Pickett Law, PLLC.
“For instance, certain Florida payday and title loan companies are exempt from usury laws due to an agreement between the state and the lender,” he explained.
» MORE: What is a simple interest loan?
What to do if you’re charged a usurious rate
There’s no central government database of usury laws, so you’ll need to research the specific laws in your state to understand precisely the rates lenders are allowed to charge and any potential exemptions. If you believe you’re being charged an illegal rate, contact your state’s attorney general. The AG’s office can provide guidance on filing an official complaint.
For consumer debt, also consider filing a complaint with the Consumer Financial Protection Bureau (CFPB). The CFPB may investigate if it receives multiple reports regarding a specific lender.
Protect your assets
If you’ve already taken out a loan with a predatory lender, consider debt relief or consolidation options to help regain your financial stability.
FAQ
Do all states have usury laws?
Many (if not all) states have usury laws, but they vary widely from state to state. You’ll need to research the specific usury laws and any exceptions that apply in your state. These laws can be complicated, so ask an attorney for advice if you’re unsure which laws apply.
Does usury law apply to credit cards?
There is no federal usury law that applies to credit cards. Instead, the laws of the state where the card issuer is headquartered generally dictate the maximum interest rate you can be charged.
What is the maximum interest rate allowed?
This depends on your state and the type of debt you have. For example, the maximum interest rate you can be charged for most consumer debt from federal credit unions is currently 18%, while some states allow licensed lenders to charge much more.
What is an example of usury?
An example of usury is a lender charging a 300% APR on a small-dollar loan in a state where the legal limit is 36%. Even if the borrower agrees to the terms, the lender is still violating state usury laws because the rate exceeds the legal maximum.
Is 20% interest legal?
It depends on the state and the type of loan. Some states cap interest rates on consumer loans at 20% or lower, while others allow much higher rates or have no cap at all. Credit cards and certain short-term loans may legally exceed 20% due to federal preemption and state exemptions.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- American Bar Association, “What Litigators Should Know About Usury Laws.” Accessed Feb. 23, 2026.
- Congressional Research Service, “Federal Banking Regulator Finalizes Rule on State Usury Laws.” Accessed Feb. 23, 2026.
- Consumer Financial Protection Bureau, “Is there a law that limits credit card interest rates for servicemembers?” Accessed Feb. 23, 2026.
- Consumer Financial Protection Bureau, "Submit a complaint about a financial product or service.” Accessed Feb. 23, 2026.
- Consumer Financial Protection Bureau, “What are my rights under the Military Lending Act?” Accessed Feb. 23, 2026.
- Federal Deposit Insurance Corporation, “Predatory Lending Resources.” Accessed Feb. 23, 2026.
- Federal Trade Commission (FTC), “Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act).” Accessed Feb. 23, 2026.
- Federal Trade Commission (FTC), “Payday Lending.” Accessed Feb. 23, 2026.
- Florida Office of Financial Regulation, “Deferred Presentment Provider.” Accessed Feb. 23, 2026.
- Holland & Knight, "Federal Court: Unlicensed Debt Buyer Violates FDCPA.” Accessed Feb. 23, 2026.
- Minnesota Legislature - Office of the Revisor of Statutes, “2025 Minnesota Statutes - Chapter 334: Money, Rates of Interest.” Accessed Feb. 23, 2026.
- National Archives, “Part 190 - Preemption of State Usury Laws.” Accessed Feb. 23, 2026.
- National Archives, “Permissible Interest on Loans that Are Sold, Assigned, or Otherwise Transferred.” Accessed Feb. 23, 2026.
- National Credit Union Administration, “Board Extends Loan Interest Rate Ceiling; Approves Annual Performance Plan.” Accessed Feb. 23, 2026.
- National Credit Union Administration, “Preemption of State Usury Laws.” Accessed Feb. 23, 2026.
- Office of the Comptroller of the Currency, “The bank is charging a higher interest rate than my state allows. Which states’ usury laws apply to credit card accounts?” Accessed Feb. 23, 2026.
- Office of the Comptroller of the Currency, “Truth in Lending.” Accessed Feb. 23, 2026.
- State of New Jersey Department of Banking & Insurance, “Personal Finance - Frequently Asked Questions.” Accessed Feb. 23, 2026.
- The Florida Legislature, “The 2025 Florida Statutes - 687.02 - 'Usurious contracts' defined.” Accessed Feb. 23, 2026.
- UpCounsel, “Understanding State Usury Laws and Interest Rate Limits.” Accessed Feb. 23, 2026.
