Jerry on Mastodon<p>Another way rich people screw people who have less money than they do. The first chance they got, profiting from financial hardship became a great business opportunity.</p><p>For much of the 20th century, many states had usury laws that capped the maximum interest rates lenders could charge on various types of loans, including early forms of consumer credit. These caps were often much lower than the 30% you see today, sometimes in the single digits or low double digits (e.g., around 8-18%). The concept of usury, historically, referred to charging excessive or exploitative interest, and was often tied to moral and religious objections to profiting from another's financial hardship.</p><p>The shift that allowed for much higher credit card interest rates primarily began in the late 1970s and early 1980s, largely due to a landmark Supreme Court decision and subsequent actions by certain states:</p><p>A 1978 Supreme Court Ruling (Marquette National Bank v. First of Omaha Service Corp.): This crucial ruling stated that a national bank could charge the interest rate allowed by the state in which it was incorporated, regardless of the usury laws in the borrower's state. This meant if a bank was based in a state with no interest rate caps (or very high ones), it could "export" those rates to customers nationwide.</p><p>State Deregulation: Following the Marquette decision, states like South Dakota and Delaware saw an opportunity to attract credit card companies by eliminating or significantly raising their usury limits. Banks quickly moved their credit card operations to these states, allowing them to charge much higher interest rates across the country. Other states, to compete and retain banking business, often followed suit by rolling back their own usury laws.</p><p>This deregulation effectively "blew the lid off" interest rate ceilings for credit cards, leading to the higher rates we see today.</p><p><a href="https://hear-me.social/tags/USPol" class="mention hashtag" rel="nofollow noopener noreferrer" target="_blank">#<span>USPol</span></a> <a href="https://hear-me.social/tags/USPolitics" class="mention hashtag" rel="nofollow noopener noreferrer" target="_blank">#<span>USPolitics</span></a> <a href="https://hear-me.social/tags/Usary" class="mention hashtag" rel="nofollow noopener noreferrer" target="_blank">#<span>Usary</span></a> <a href="https://hear-me.social/tags/interestrates" class="mention hashtag" rel="nofollow noopener noreferrer" target="_blank">#<span>interestrates</span></a> <a href="https://hear-me.social/tags/greed" class="mention hashtag" rel="nofollow noopener noreferrer" target="_blank">#<span>greed</span></a> <a href="https://hear-me.social/tags/exploitation" class="mention hashtag" rel="nofollow noopener noreferrer" target="_blank">#<span>exploitation</span></a></p>