3 ms·

There's no 'general and historical' interest rate limit of 8-12%. Credit card APRs in the United States range up to 30% or so, and payday loans can have APRs o

There's no 'general and historical' interest rate limit of 8-12%. Credit card APRs in the United States range up to 30% or so, and payday loans can have APRs of well over 100%. In other countries, rates for products catering to the poor are similarly high - this is just the cost of doing business when extending small amounts of credit to poor prospects with high default rates. The wisdom of that is what should be debated. Since businesses need to charge high interest rates to compensate for defaults, does mean the poor shouldn't have access to credit at all? Note that that's what effectively happening in Andhra Pradesh, where laws to 'protect the poor' have dropped the repayment rate of loans to under 20 percent, ensuring microcredit there will cease to exist.

r90 16y ago
Check your facts: http://www.lectlaw.com/files/ban02.htm http://www.lectlaw.com/files/ban02.htm E.g. Alabama: ALABAMA, the legal rate of interest is 6%; the general usury limit is 8%. The judgment rate is 12%. Like I said, it's not perfect, there are many exceptions. The US has devolved quite a bit from the humane society that built it up. But generous bankruptcy laws still make it possible for Americans to escape high debt. In India, suicide seems to be the only solution for some.
- roel_v 16y ago
  Did you even read your own link? Here's the second (!) paragraph from it: "But my car loan is higher than that"; "But I'm paying way more than that on my credit cards." That's right! Banks have separate rules. In fact, due to high inflation, in 1980, the federal government passed a special law which allowed national banks (the ones that have the word "national" or the term "N.A." in their name, and savings banks that are federally chartered) to ignore state usury limits and pegged the rate of interest at a certain number of points above the federal reserve discount rate. In addition, specially chartered organizations like small loan companies and installment plan sellers (like car financing companies) have their own rules.
  - _delirium 16y ago
    That seems to support the claim that this is a recent departure from the "general and historical" caps on interest rates, though: most states have long had usury laws with interest-rate caps, and national banks were only exempted from them in 1980.

r90 16y ago

Check your facts: http://www.lectlaw.com/files/ban02.htm http://www.lectlaw.com/files/ban02.htm E.g. Alabama: ALABAMA, the legal rate of interest is 6%; the general usury limit is 8%. The judgment rate is 12%. Like I said, it's not perfect, there are many exceptions. The US has devolved quite a bit from the humane society that built it up. But generous bankruptcy laws still make it possible for Americans to escape high debt. In India, suicide seems to be the only solution for some.

roel_v 16y ago
Did you even read your own link? Here's the second (!) paragraph from it: "But my car loan is higher than that"; "But I'm paying way more than that on my credit cards." That's right! Banks have separate rules. In fact, due to high inflation, in 1980, the federal government passed a special law which allowed national banks (the ones that have the word "national" or the term "N.A." in their name, and savings banks that are federally chartered) to ignore state usury limits and pegged the rate of interest at a certain number of points above the federal reserve discount rate. In addition, specially chartered organizations like small loan companies and installment plan sellers (like car financing companies) have their own rules.
- _delirium 16y ago
  That seems to support the claim that this is a recent departure from the "general and historical" caps on interest rates, though: most states have long had usury laws with interest-rate caps, and national banks were only exempted from them in 1980.