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In the "good old days", the term
usury was used to describe the act of lending
money at any
interest rate no matter how high or low. In
modern times, usury refers to lending money at
unusually high or illegal
interest rates.
The definition of what level of interest rates can
be considered usury is a moving target as
variable rate loans push interest charges to
record highs. Just a few years ago 19% would be
considered usury. Today, with states like Delaware
and South Dakota passing laws that effectively let
lenders charge as much interest as the borrower is
willing to pay, it's hard to pin usury down to a
firm amount.
One thing you can be sure of, if you borrow money
for a licensed and registered lending company,
U.S. Bank, or carry an open balance on your
credit cards, the chances are good that the
rate you pay will be legal even if you personally
feel that it's usury. That's because the legal
penalties are high for lenders who violate usury
laws.
On the other hand, if you borrow money from th guy
that hangs out behind the neighborhood gas
station, usury is the least of your worries.
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