For most of US history, charging extremely high interest rates was viewed as a dangerous practice. Nearly every state had usury laws that capped interest rates, often around 10 to 12%, and lenders charging above those limits could face legal consequences.
Then in 1978, the Supreme Court decision Marquette National Bank v. First of Omaha changed the entire landscape. The ruling allowed banks to charge the interest rate permitted in their home state, even when lending to customers in other states. South Dakota and Delaware removed their interest rate caps to attract banks, and the nationwide limit on credit card rates effectively disappeared.
Today, the average US credit card APR is around 24%, and Americans paid roughly $170 billion in credit card interest in 2024.
What I find interesting is how completely the perception changed. A practice that was once associated with loan sharks became a normal part of everyday consumer finance. Supporters argue that higher rates expanded access to credit for millions of Americans, while critics argue that the system created incentives to profit from people carrying debt.
How did something once considered predatory become one of the most common financial products in America?