Yes, it is breaking the law.
It used to happen with mortgages in the past, hence initiating usury laws.
From Wiki:
My point was that just because something was banned (or legal) for thousands of years means absolutely nothing. Usury was banned because some mistakenly thought that the Bible prohibited high interest. In reality, Old Testament Law banned all interest. The idea of “usury” as some sort of ill-defined high-intererest rate is flawed from both a Biblical and an economic perspective. Just because people for thousands of years misread the Bible and had no respect for freedom does not mean we should do the same today.
Again, perhaps this happened in rare cases in the past. So what? What does it have to do with high-interest loans today? If it happens today, it is very rare and already against the law. It certainly can’t be used as an argument against high-interest loans.
This is O/T- but a similar question. If I have a spare $200, is it better to pay it off a credit card with a high interest rate or pay it off a mortgage with a far lower interest rate but reduce the principal of the loan over a longer time?
Credit card. Always target the high interest rate debt first. Plus (at least here in the U.S.) mortgage interest is tax deductible so it’s not quite as pernicious as credit card interest.
Haven’t you every hear of history repeating itself? Just because it happened in the past, doesn’t mean it can’t (or won’t) happen today.
This is the Dope, me bucko; don’t you know that anything can be used as an arguement? 
(Please don’t take offense at this Cicero) but Cicero is an example of an average borrower who doesn’t immediately know the answer to a financing question that seems quite obvious to a lot of us. Cicero is par for the course.
Lenders know the average and below average borrowers don’t understand what seems like straight forward terms.
Take for instance a car loan for $15,000. An uneducated borrower when asked
“What $15K car loan do you want? 4 years at 6%, or 6 years at 12%?” and is shown which has a lower monthly payment will go with the 12% loan thinking they’re smart saving over $50 a month not realizing the dealer just suckered them into an extra $4,200 for the car.
Hey- no offence. I have no mortgage and nothing at all on credit cards.
But I think I may be asking a different question to the one you answered. If for example you had a home loan (mortgage) of $200,000 at 9% or a credit card bill of $2,000 at 17% and you have an extra $200 in your bag- which does it make most sense to plonk it on?
I don’t necessarily think it’s a question of “smart” or “dumb.” Perhaps the borrower doesn’t make enough money to easily afford an extra $50 a month. In that case, the “smart” play is to go with the lower monthly payment.
It’s like poor people living in hotels that charge by the week. The charges, when added up, usually cost more than monthly rent for a much nicer apartment. But apartments demand a credit check, first month’s rent, a security deposit, thirty-days notice to move out, etc. So if you have an unsteady source of income or can’t save enough to pay a security deposit, etc., then it makes sense to live in a weekly hotel.
What I’m trying to say is that many of these “dumb” financial decisions actually make sense to the people who make them given their circumstances. Yes, in the long-run the way they are living their life isn’t that great. But it’s innacurate to say they are being ripped off when they are pretty well aware of the trade-offs they are making.
In the long run, assuming the person with the bill is also going to make changes in his life for the better (be more financially responsible, get raises/better job, is debt averse, etc.) then the obvious play is to pay down the the cc bill because of the high interest.