# What is the Max that Credit Cards can Charge Interest? **URL:** \ **Category:** Factual Questions\ **Created:** [November 17, 2001, 12:35am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853 "2001-11-17T00:35:29Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![Chubbs](https://avatars.discourse-cdn.com/v4/letter/c/47e85d/32.png) [@Chubbs](https://boards.straightdope.com/u/Chubbs)\ **Post date:** [November 17, 2001, 12:35am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/1 "2001-11-17T00:35:29Z")
Is there a limit on how high they can go? ---
**Author:** ![barking\_frog](https://avatars.discourse-cdn.com/v4/letter/b/96bed5/32.png) [@barking\_frog](https://boards.straightdope.com/u/barking_frog)\ **Post date:** [November 17, 2001, 12:49am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/2 "2001-11-17T00:49:30Z")
There are laws against loan sharking, and I suspect that credit card companies would have to obey them. I suppose it differs everywhere, but for example in Alberta I think it’s in the neighbourhood of 100% PA. ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [November 17, 2001, 1:06am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/3 "2001-11-17T01:06:10Z")
[California Usury Law, summarized](http://www.candlaw.com/newsletters/nov90.html) > [@](#): > > _Permitted Interest Rate_. The maximum interest rate permitted on loans used primarily for personal, family or household purposes is 10% per annum. The maximum > interest rate on loans used for business and all other purposes is the higher of 10% per annum, or 5% per annum plus the interest rate established by the Federal > Reserve Bank of San Francisco on the 25th day of the month preceding the earlier of the date of execution of the contract to make the loan or the date of making of > the loan. On October 25th, Federal Reserve Bank interest rate was 7%. So yes, in California, at least, there is a usury law that limits the amount of interest one can charge. > [@](#): > > _Exempt Lenders._ The following lenders are exempt from the usury law: **(a) banks; (b) savings and loan associations; (c) industrial loan associations; (d) credit > unions;** (e) personal property brokers; (f) licensed pawnbrokers; (g) nonprofit cooperative agricultural associations; and (h) pension funds or retirement systems > subject to the federal Employee Retirement Income Security Act of 1974. A lot of exemptions, aren’t there? A good reason to check your state’s laws before you scream “YOU FILTHY USURER!” at your bank manager. 😃 > [@](#): > > _Conclusion._ **Each of the fifty states has a usury law, and no two usury laws are identical. Because of the complexities and constant changes in the law, it is important to seek professional advice before acting on any of the matters covered herein.** I couldn’t have said it better myself. ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [November 17, 2001, 1:10am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/4 "2001-11-17T01:10:20Z")
Sorry. I didn’t see the part about credit cards. Here’s an interesting link on how usury laws apply to credit cards: [Usury laws offer diminishing protection for credit card holders](http://www.bankrate.com/brm/news/cc/19980202.asp) > [@](#): > > **No limit on rates in 26 states** > There are 26 states that have no limit on what bank credit card issuers can charge for interest rates, according to the American Bankers Association. Issuers in 27 states have no limit on what they can charge for annual fees. Interesting, no? Check your local laws. ---
**Author:** ![ShibbOleth](https://avatars.discourse-cdn.com/v4/letter/s/848f3c/32.png) [@ShibbOleth](https://boards.straightdope.com/u/ShibbOleth)\ **Post date:** [November 17, 2001, 1:12am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/5 "2001-11-17T01:12:19Z")
If you ever go over 60 days on American Express without paying in full, they will hit you with a whopping 35% interest (for the amount over 60 days, not annualized). But they just call it a “penalty”. I’ve had this happen a couple of times for a number of reasons, and it’s never pretty. I guess they can do this since they are not technically (by their definition) a “Credit Card”, since you owe them everything as soon as the bill comes due. ---
**Author:** ![BobT](https://avatars.discourse-cdn.com/v4/letter/b/8e8cbc/32.png) [@BobT](https://boards.straightdope.com/u/BobT)\ **Post date:** [November 17, 2001, 1:15am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/6 "2001-11-17T01:15:01Z")
Reminding me of a scene from “The Simpsons” > [@](#): > > Burns: Are you acquainted with our state’s stringent usury laws? > Homer: [slowly] Usury? > Burns: Oh, silly me! I must’ve just made up a word that doesn’t exist. > – Approving Homer’s loan to pay for ``Lisa’s Pony’’ ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [November 17, 2001, 1:16am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/7 "2001-11-17T01:16:04Z")
Read [Credit card issuers right at home in states with few rules](http://www.bankrate.com/brm/news/cc/19990315.asp), and [State usury limits](http://www.bankrate.com/brm/news/DrDon/20010129a.asp). They’re copyrighted so I won’t quote. One point they make is that card issuers in lender friendly states like Delaware or South Dakota can charge you, in California or Maine, interest as allowed in their home state. ---
**Author:** ![PhiloVance](https://avatars.discourse-cdn.com/v4/letter/p/e19adc/32.png) [@PhiloVance](https://boards.straightdope.com/u/PhiloVance)\ **Post date:** [November 17, 2001, 2:50am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/8 "2001-11-17T02:50:58Z")
[soapbox] [slight hijack] We were with an unscrupulous lender, shall we say, called, of all things ‘Chevy Chase Cash Rewards’. My wife signed up for it and in the beginning it was rather a medium priced credit card (15%). Then lo and behold in late 1998 I guess they hit a rough spot and began ‘holding’ up payments and posting them late to increase their revenue. We had proof of this later, but at the time we just suspected it. They had a grand scheme going as they only hit people with $5000 balances or above. Figuring, we finally surmised, that those people were probably not going to complain because they probably didn’t have the wherewithall to pay it off. Then, they began increasing the interest rate, from 15 to 16.5 to 19 and so on. Our’s finally topped off at 27.8% before we finally paid it off. With the help of Ralph Nader we finally filed a class action suit against them and they failed to show up for the trial. Said there was a sale of the company in progress, which in fact there was. They finally sold out to First USA, another crooked CC company. [/soapbox] [/slight hijack] [Related thread](http://boards.straightdope.com/sdmb/showthread.php?threadid=99059) ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [November 17, 2001, 4:40am UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/9 "2001-11-17T04:40:02Z")
> [@](#): > > \*Originally posted by Ian Fan \* > \*\*There are laws against loan sharking, and I suspect that credit card companies would have to obey them. I suppose it differs everywhere, but for example in Alberta I think it’s in the neighbourhood of 100% PA. \*\* It’s the same rate everywhere in Canada - it’s a criminal offence to charge interest rates over 60% p.a. See the [Criminal Code](http://laws.justice.gc.ca/en/C-46/36645.html): > [@](#): > > **347.** (1) Notwithstanding any Act of Parliament, every one who > > (a) enters into an agreement or arrangement to receive interest at a criminal rate, or > > (b) receives a payment or partial payment of interest at a criminal rate, > > is guilty of > > © an indictable offence and is liable to imprisonment for a term not exceeding five years, or > > (d) an offence punishable on summary conviction and is liable to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding six months or to both. > (2) In this section, > … > “criminal rate” means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds **sixty** per cent on the credit advanced under an agreement or arrangement ---
**Author:** ![Napier](https://avatars.discourse-cdn.com/v4/letter/n/ce73a5/32.png) [@Napier](https://boards.straightdope.com/u/Napier)\ **Post date:** [November 17, 2001, 1:51pm UTC](https://boards.straightdope.com/t/what-is-the-max-that-credit-cards-can-charge-interest/93853/10 "2001-11-17T13:51:00Z")
I have a Texaco card that allows ATM withdrawals and a running balance as high as $800. The bill shows many numbers including an “APR %” that changes month to month but is occasionally above 100% and has been 116%. Needless to say, this one just gets paid off every month.