Usury

For much of history, charging interest at all was considered morally wrong in many cultures and religions. Over time, the meaning of usury shifted to refer to charging unreasonably high rates.

Today, many jurisdictions have usury laws or interest rate caps. In the United States, each state sets its own limits, although many exemptions apply, for example for banks headquartered in states with no cap, which can lend nationwide at their home state's rates. Some countries cap the total cost of certain loans; the United Kingdom, for example, caps the cost of high-cost short-term credit, such as payday loans.

For example, a state might cap interest on certain consumer loans at 36% a year, making loans above that rate unenforceable or illegal.

Supporters argue that interest rate caps protect vulnerable borrowers from exploitation and debt traps. Critics argue they can reduce access to credit for higher-risk borrowers, who may turn to unregulated or illegal lenders. Islamic finance prohibits interest altogether and uses alternative structures, such as profit-sharing and leasing.