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%.  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.

You can avoid being charged interest by your credit card company by paying your balance in full each and every month.  Interest is assessed on your balance after it has been outstanding for one or more billing cycles.  If you are only paying the minimum payment on you accounts then the interest you are being charged will become compounded and it will take you a very long time to pay off your credit card debt.

The only other obvious way to avoid being charged interest is to apply for a card with a zero percent interest rate.  Most cards only offer zero percent APRs for a limited period of time.  Make sure that when the zero percent APR offer ends you have paid off your balance in full, otherwise you will be assessed interest.

The annual percentage rate (APR) represents how much money your financial institution charges you on your credit card balance or loan, and is expressed as an overall percentage of your balance.  For example, if your loan has an APR of ten percent, you will pay $10 annually for every hundred dollars you have in outstanding balances.

Usually, credit cards have higher APR’s for cash advances than they do for regular purchases or balance transfers.  Also, some companies appeal to consumers with credit card offers that feature low introductory APRs; for example, zero percent APR on balance transfers (or purchases) for six months

The banks are all bleeding money due to record high credit card default rates.  Compounding their problems is the Credit CARD Act of 2009, which once put into effect, will put restrictions on interest rate hikes for all credit card issuers.  To answer your question simply, the Credit CARD Act becomes effective in February 2010.  Between now and then, the banks are doing all that they can to shore up their books before the law becomes effective.  It’s not fair to consumers, but there will be some correction to these practices once the law becomes active.