Usury Interest Rate by State: Maximum Legal Interest Rates Explained

A usury interest rate is the maximum amount of interest a lender is legally allowed to charge, and that cap is set almost entirely by state law, not federal law. There is no single nationwide usury limit for most loans, so the legal ceiling you face depends on which state you live in, what type of loan it is, and whether the lender holds a special license that exempts it from the general cap. In broad terms, general usury limits range from around 10% per year in stricter states to 18% or higher elsewhere, but the exceptions are so wide that many everyday loans, especially credit cards and payday loans, are not bound by the headline number.

What "usury" actually means

Usury is charging interest above the legal maximum. Usury laws are some of the oldest consumer protections in American law, and every state has some version of them. They exist to stop lenders from trapping borrowers in debt with rates that can never realistically be paid off. When a loan crosses the usury line, the consequences for the lender can be serious: depending on the state, the lender may forfeit the interest, forfeit part of the principal, or face criminal penalties for what some states call criminal usury.

The catch is that usury caps are riddled with exceptions. Most states have a low "general" rate that applies when a written contract doesn't specify otherwise, plus a higher "contract" rate the parties can agree to in writing, plus a long list of licensed lenders and loan types that are exempt entirely. This is why a state can have a 10% general usury cap and still have storefront lenders legally charging triple-digit annual percentage rates.

The federal baseline: mostly hands-off, with key exceptions

For most consumer loans, there is no general federal usury cap. The federal government instead focuses on disclosure and fairness rather than setting a maximum rate. The Truth in Lending Act (TILA), enforced by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC), requires lenders to clearly disclose the annual percentage rate (APR), finance charges, and total cost of credit before you sign. TILA doesn't tell a lender what it can charge, but it makes the lender tell you, in standardized terms, so you can compare offers.

There are a few important federal exceptions where a real rate cap exists:

• The Military Lending Act (MLA) caps the Military Annual Percentage Rate at 36% for most consumer loans to active-duty servicemembers and their dependents. This is a hard federal ceiling for that group.
• Federal credit unions are subject to an interest rate cap set by the National Credit Union Administration (historically 18% on most loans, with limited adjustments).
• National banks benefit from a long-standing rule that lets them charge the interest rate allowed in the state where the bank is located, even to customers in other states. This is why many credit cards are issued from states with no rate cap, effectively bypassing your home state's usury law.

That last point is crucial: because of "rate exportation," your state's usury cap often does not protect you on bank-issued credit cards. State usury limits bite hardest on individual lenders, private loans, and many non-bank lenders.

How state usury limits typically work

Most states structure their usury law in layers. Understanding the layers helps you read your own state's rules:

• The general or "legal" rate applies when no rate is stated in writing, such as on an unpaid invoice or an oral loan between individuals.
• The maximum contract rate is the highest rate two parties can agree to in a written contract for an ordinary loan.
• Criminal usury is a higher threshold above which charging interest becomes a crime, not just an unenforceable contract term.
• Licensed-lender exemptions remove entire categories of lenders (consumer finance companies, payday lenders, pawnbrokers, retail installment sellers) from the general cap, as long as they hold the right state license.

This varies significantly by state, and the precise numbers, exemptions, and penalties differ everywhere. Always confirm the current figures with your state's statutes or your state Attorney General before relying on them.

California usury interest rate

California's general usury limit comes from the state Constitution. For most consumer loans, the cap is commonly cited as 10% per year, and for other loans it is generally the higher of 10% or 5% above the Federal Reserve rate. However, California's exemptions are extremely broad. Loans made or arranged by licensed lenders under the California Financing Law, banks, credit unions, and many other licensed entities are not subject to the constitutional cap. California has separately moved to cap rates on certain larger consumer installment loans through its financing laws, but payday-style and many storefront loans operate under their own licensing rules. The practical takeaway: California's 10% figure mainly governs private and unlicensed lenders, not most commercial lending.

Texas usury interest rate

Texas usury law is governed by the Texas Finance Code and is notoriously layered. The general statutory ceiling many people cite is 10% per year when no other rate is authorized, but the Code provides multiple alternative ceilings and formulas that can allow substantially higher rates depending on the loan type and how the lender is licensed. Texas also regulates many high-cost loans through Credit Access Businesses, which can produce very high effective costs on small-dollar loans despite the state's reputation for a low base usury rate. Texas does provide meaningful penalties against lenders who charge usurious interest, including potential forfeiture of principal and interest in serious cases, so the law has teeth where it applies.

New York usury interest rate

New York is one of the stricter states and uses a two-tier system. The civil usury limit is generally 16% per year, and the criminal usury limit is generally 25% per year. Charging above the criminal usury rate can expose a lender to criminal liability, not just an unenforceable contract. New York's caps are taken seriously and have been used aggressively against predatory and online lenders. As always, banks, licensed lenders, and certain larger or commercial loans may fall under different rules, but for ordinary private loans New York's 16% and 25% thresholds are the key numbers.

Florida usury interest rate

Florida sets its usury limits by the size of the loan. For loans of $500,000 or less, the cap is generally 18% per year; for loans above $500,000, the cap is generally 25% per year. Florida also defines criminal usury, and charging above the 25% threshold (and especially above 45%) can carry criminal penalties. Like everywhere else, Florida exempts many licensed lenders and specific loan products, so the headline rate is the starting point rather than the whole story.

How to check whether your loan is usurious

If you suspect a lender is charging more than the law allows, work through these steps:

• Find the true APR. Under TILA, your loan documents must disclose the APR and total finance charge. Don't rely on a monthly rate or a "fee" the lender quotes; convert everything to an annual percentage rate so you're comparing apples to apples.
• Identify the loan type and the lender's license. A national bank credit card, a licensed consumer finance loan, and a private loan from an individual are governed by different rules. The exemptions are where most disputes are won or lost.
• Look up your state's current usury statute. Your state Attorney General's office, your state's department of financial regulation, or the statute itself will have the controlling numbers. Treat any rate you read online, including the figures here, as a starting point to verify, not a final answer.
• Document everything. Keep the signed contract, the payment schedule, every statement, and a written log of payments made. If you believe the rate is illegal, that paper trail is your evidence.

What to do if you think you're being overcharged

You have several avenues, and you can use more than one at the same time:

• Complain to the CFPB. The CFPB takes complaints about most consumer lenders and forwards them to the company for a response, which is often logged and tracked. This is free and creates an official record.
• Complain to the FTC. The FTC accepts reports about unfair and deceptive lending practices and uses them to spot patterns, even if it doesn't resolve your individual case.
• Contact your state Attorney General. Because usury is mainly state law, your state AG and state financial regulator are often the most powerful allies. Many have dedicated consumer protection divisions that pursue predatory lenders.
• Talk to a consumer attorney or legal aid. If a loan is usurious under state law, you may have a defense to repayment or a claim against the lender. Many states let you recover penalties, and legal aid organizations handle these cases for free for qualifying borrowers. There is no single nationwide deadline to act, so ask about the statute of limitations in your state early.

One important reminder: a usurious rate does not automatically erase your debt the moment you discover it. In most situations you need to raise the issue, whether by complaint, negotiation, or in court, and let the legal process apply your state's penalty. Stopping payment without a plan can lead to default, collections, and credit damage even if your underlying claim is strong.

The bottom line

Usury caps are real and meaningful, but they are state-specific and full of exceptions, especially for banks and licensed lenders. Federal law focuses on disclosure through TILA and adds hard caps only in narrow situations like the Military Lending Act's 36% limit. To know your real ceiling, identify your state, your loan type, and the lender's licensing status, then verify the current numbers with your state Attorney General or the statute itself. This is general information to help you ask the right questions, not legal advice about your specific loan.

Know the law

High-cost lending is governed by the Truth in Lending Act and by state usury caps — and in many states, payday lending is restricted or banned.

Key federal laws:

• Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.

Where to get help or file a complaint:

• Consumer Financial Protection Bureau (CFPB) — submit a complaint

Your state matters too. Federal law is the floor — your state sets the statute of limitations on debt, garnishment and exemption limits, payday and repossession rules, and has its own Attorney General and consumer-protection laws. Always check your state’s rules. This is general legal information, not legal advice.