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Blackstone’s Commentaries on the Laws of England says that “ When money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for the use, the increase is called interest by those who think it lawful, and usury by those who do not.” (p. 1336)

Today, in the United States, states have created usury laws in order to set a maximum legal interest rate limit. Because Congress has chosen not to regulate interest rates on a national level, individual states have made the decision to to protect their consumers. Unfortunately, the usury cap is still at a very questionable rate and in the last twenty or so years it has only risen. In the state of Michigan, the usury rate is currently 25%. Which begs the question, why have interest rates been allowed to soar to such outrageous amounts?

First and foremost, we must discuss national consumer debt and the gold mine credit card companies are sitting on. When a consumer loses their job and/or becomes overwhelmed by medical bills due to a lack of sufficient health care options in the U.S., the consumer, the doctors, and hospitals involved suffer. However, the credit card companies that the consumer used to help with those medical bills continue to make bank. Why? Because credit card companies, and other similar lending companies, have been allowed to continuously charge usurious rates on the balances owed by the struggling consumer.

And just when state governments were stepping in to defend fellow consumers, the Treasury Department made a preempted strike, stating that investigations of abusive lending practices (to include abusive usury rates) rests solely on the shoulders of the Treasury Department. (Treasury Directive 27-07) This unprecedented move left individual states with little choices regarding the protection of their consumers against out of control interest rates. And while states do indeed possess usury laws, the 30+% interests rates charged by these companies prove that these laws provide very little protection, if any.

The Federal government seems to make a habit out of superseding state laws where usury is concerned. According to the Comptroller of Currency, national banks existing in states where usury laws are in place are not only allowed to charge the maximum rate permitted according to the law of that state, they are also allowed to charge non-interest related fees—though state laws may incorporate and/or prohibit such fees under usury law—as long as they do so with “sound banking judgment” and handle these fees in a non-interest related manner. National banks received this ability to override state usury laws after inflation occurred in the 1980s.

In addition to the existing high interest rates, credit card companies have free reign to apply tactics that trap the consumer in an unending cycle. Even if a consumer is habitually on time on all payments, one incident causing a late payment can skyrocket the interest rate by, sometimes, 20% without the consumers knowledge. In the case of universal default, if a consumer is late on a utility bill, their credit card rates can be directly affected. Michigan and other states have no control over such tactics since the seizure of authority by the Treasury Department; moreover, since the seizure, very little action on the part of the federal government has taken place to regulate and gain control over interest rates and lending practices.

Dare we say that it appears as if the national government is choosing to look the other way where the credit card lending industry is concerned. In addition, as long as credit card companies remain major financial contributors in Washington, there seems little hope for the fellow consumer. And yet here we are: Consumers are left out in the cold to defend themselves against a debilitating economy, an increasing unemployment rate, threats of foreclosures, and mortgage and credit card interest rates soaring to usurious levels. Chanting “this, too, shall pass” over and over again is no longer as comforting as it used to be. If there was ever a time to seek financial help, now would be that time.