mantz..
Thank you for your question. Credit card rate laws are known as usury
laws. Unfortunately, usury laws apply to the credit card companies,
not the consumers. What this means is that depending on where the
credit card issuing company is based determines the interest rate, not
where the card holder lives. The best advise I can give you is to pay
as much as possible, if not the entire balance, on those credit cards
as soon as possible.
Good luck! Thanks again for your question and if you need any
additional clarification, please let me know.
Regards,
-THV
Search Strategy:
california law maximum credit card "interest rate"
usury laws
References:
Usury laws offer diminishing protection for credit card holders
http://www.bankrate.com/brm/news/cc/19980202.asp
California Civil Code
http://www.leginfo.ca.gov/.html/civ_table_of_contents.html
Credit Card Companies sidestep Usury Laws
http://216.239.53.100/search?q=cache:a-XRz-fYxZcC:www.consolidation.net/documents694.htm+states+with+usury+laws&hl=en&ie=UTF-8
(Google Cache)
Credit Cards: 8 Dirty Secrets
Card companies are getting creative with fees. Here's how to avoid
their traps.
http://money.cnn.com/2002/03/12/pf/banking/q_creditcard/ |
Request for Answer Clarification by
mantz-ga
on
30 Dec 2002 17:32 PST
Your answer was a non-answer. Everything you wrote I already knew.
Most states have limits to the interest cards may charge. Texas
allows only 10%. I wanted to know if California has a law on its
books limiting the rate of interest.
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Request for Answer Clarification by
mantz-ga
on
30 Dec 2002 17:49 PST
Thanks for your answer, unfortunately, it was incomplete. I wanted to
know the California rate limit. I did not say whether my cards were
issued outside of California. I am familiar with usury. Usury laws,
as I understand them, state that if a lender is charging more interest
than allowed by law, the lender not only forfeits the interest due,
but the balance. Texas law,does not allow companies to charge more
than 10%. The card that I am concerned with (Providian)has raised my
rates to 23%, and maybe headquartered in Texas. So would mean, based
on your answer, they are in violation of Texas law?
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Clarification of Answer by
tar_heel_v-ga
on
30 Dec 2002 18:19 PST
mantz,
I apologize if I misunderstood your question. I thought you were
asking what the maximum interest rate you could be charged as a
resident of California. There are no rate caps for credit cards
issued in California, either by California based issuers nor out of
state issuers. In 1978, the National Banking Act made it possible for
banks that are National (have the N.A. in their name) to be exempt
from state usury laws. In Marquette vs. First Omaha Service Corp.,
the Supreme Court ruled that a national bank could charge the highest
interest rate allowed in their home state to customers living anywhere
in the United States, including states with restrictive interest caps.
Therefore, if a credit card company based in, let's say South Dakota,
issues a card to someone in Texas, that card issuing company is not
held to the Texas usury laws, which are fairly strict, but rather they
are held to the usury laws of South Dakota, which are some of the
loosest in the country. States cannot regulate the intrest rate
charged on card that are issued from out of state. The laws in Texas,
and all other states with California included, are only applicable to
cards issued by issuing banks and companies within those states, which
tend to be smaller, regional based companies. That is why companies
like FirstUSA, Citibank and other large, national players, are based
in states like South Dakota and Delaware. There are only 21 states
and the District of Columbia that have interest rate caps for credit
card rates:
Alaska 17%
Colorado 21%
District of Columbia 24%
Florida 18%
Hawaii 24%
Indiana 21%
Kansas 14.45% to 18%
Kentucky 21%
Louisiana No limit for qualified in-state issuers. Limit for all
other issuers is 18%.
Maryland 24%
Massachusetts 18%
Minnesota 18%
Mississippi 18% for cards with annual fees; 21% for cards without
annual fees
Missouri 22%
North Carolina 18%
Ohio 18%
Oklahoma 21%
Tennessee 21%
Texas 14% to 22%
Washington 18%
West Virginia 18%
Wyoming 21%
http://www.bankrate.com/dls/news/cc/20020320b.asp
You can learn more here:
State usury limits
http://www.bankrate.com/crt/news/DrDon/20010129a.asp
Credit card issuers flock to states with no usury laws
http://www.bankrate.com/crt/news/cc/19990315.asp
Credit card companies sidestep usury laws
http://www.bankrate.com/dls/news/cc/20020320a.asp
I hope this clarifies your question. If you need any additional
information, please let me know.
-THV
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Clarification of Answer by
tar_heel_v-ga
on
30 Dec 2002 18:32 PST
mantz..
I saw your second clarification request after I posted my first
response. Providian in based in California, which does not have usury
laws as they apply to credit cards. If they were based in any of the
21 states I listed, they would be held to those state usury laws. So,
in theory, yes, if Providian was based in Texas, they would not be
able to charge you more than 22% (As of March, 2002) interest rate.
For example, I live in North Carolina, but I have a credit card that
has an interest rate of higher than 18% that was issued by a national
issuer.
Additional information:
Laws capping interest rates
http://www.bankrate.com/dls/news/cc/20020814f.asp?prodtype=cc
Thanks again!
-THV
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