Usury
CreditGlossary term
Definition
The practice of charging illegally or unethically high interest rates on a loan, which exceeds the limits set by state or federal law. Usury laws vary by state, with some states setting strict caps on interest rates while others have more lenient regulations. These laws exist to protect borrowers from exploitative lending practices that can trap them in cycles of debt.
Related terms
- Predatory LendingUnfair or deceptive lending practices that impose abusive loan terms on borrowers, often targeting people with poor credit or limited financial literacy. Common signs include extremely high interest rates, hidden fees, loan flipping, and balloon payments that the borrower cannot reasonably afford. Federal and state laws, including the Truth in Lending Act, aim to protect consumers from predatory lending.
- Fair Credit Reporting Act (FCRA)A federal law enacted in 1970 that regulates how consumer credit information is collected, shared, and used by credit bureaus and other entities. The FCRA gives you the right to access your credit report, dispute inaccurate information, and be notified when your credit report is used against you. It also requires credit bureaus to investigate disputes within 30 days and remove information that cannot be verified.
- Credit CounselingA service provided by certified professionals who help you manage debt, create a budget, and develop a plan to improve your financial situation. Nonprofit credit counseling agencies can negotiate with creditors on your behalf to lower interest rates or set up a debt management plan. Reputable agencies are accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America.
Get advice that uses your real numbers
Warren reads your accounts and explains what terms like this mean for your plan. Free to start, no credit card required.