re: #168 wheat-dogghazi

Something tells me the change in maximum interest rates came about after lobbying by the banks and credit card firms during the Reagan era.

I found my answer. Took some digging. The change first came about in 1979, after SCOTUS ruled that banks could charge the highest interest permissible in the bank’s own state to all customers, regardless of where they live. In other words, state usury laws no longer applied.

Then the bank deregulation act of 1980 extended the looser interest rate rules to state-chartered banks. In short order, state legislatures fell in line and gave state-charted banks carte blanche to charge whatever out-of-state banks charge.

(See what I did there?)

“In effect, what that really meant is that there are virtually no interest rate limits that are applicable to any type of bank, anywhere in the country, anymore,” says Christopher L. Peterson, a professor of law at the University of Utah in Salt Lake City, and usury law expert.

Read more: bankrate.com
Follow us: @Bankrate on Twitter | Bankrate on Facebook

Credit unions, on the other hand, have a maximum interest rate of 18%.