Usury laws specify the maximum legal interest rate at which loans and credit card accounts can be extended.  A bill for one such law is soon to be introduced to the House of Representatives and would cap the interest rate on all credit card accounts at 16 percent.  While the goal is to lower interest rates for applicants that represent a high-risk to creditors, usury laws will actually hurt this very segment of consumers.

If passed, banks are not likely to respond to usury laws by extending credit to everyone that applies at a rate of 16 percent or lower.  The more likely repercussion is that banks will deny credit to consumers whose credit histories do no warrant an interest rate at or below the usury law’s cap. Thus, if passed, usury laws will prevent an entire segment of consumers from acquiring credit when they need it the most.