Usury Laws

• In times past, usury laws protected consumers by legislating a maximum level of interest that ensured that rates could never get past this level. These numbers varied from state to state. However, in 1978 the rules changed when it was decided that national banks could charge the maximum rate of the state in which they're incorporated to any customer, regardless of where the customer lives. Therefore, banks set up their headquarters in those states with the most lenient usury laws, such as Washington and Delaware.
  
  

Maximum Interest Rates

• In short, there is no maximum interest rate for credit cards. This is because the banks have take advantage of usury law flexibility and operate where they are essentially above the law. Credit card interest rates can be as high as 30 percent or more, although most fall somewhere between 10 and 20 percent. Sky-high rates are uncommon, although First Premier Bank introduced a bad-credit credit card in 2009 with a rate of 79.99 percent The rate has since been dropped to 59.99 percent.
  
  

Penalty Interest Rates

• What's most unfortunate is that you can apply for a card, get a good interest rate, then see that rate get replaced by a penalty APR if you pay late. Whereas paying late once in the past doomed you to a penalty interest rate, you're now subject to a review if you make a late payment. Still, the prospect of getting your rate bumped up to 30 percent is less than appealing. Keep in mind that the penalty interest rate may become even higher in the future; the current standard rate of 29.99 percent as of publication can change whenever the banks feel an increase is necessary.
  
  

Keeping Interest Rates Low

• Instead of worrying about how high your interest rates can be, do whatever you can to keep them as low as possible. Make your payments on time and don't give your credit card company any reason to hike your rates. If your rates are increased, or if you just feel like you're paying too much, call and ask for a reduced rate. If the bank refuses, threaten to transfer your balance to another credit card. That may be all it takes for you to get the interest rate you deserve.