In the United States, it has been up to the states to set limits on interest rates and usury on their own. While there are several ways that companies have tried to circumvent these laws, limits on the maximum allowable interest rate are generally seen as a good thing. Predatory lending has been a problem for most of human history, but these laws can help to protect consumers. 

The information below is current as of 2018. Laws change often, please check the accuracy of this information by checking current state laws.

Usury rates change from time to time. If you see an error, please let us know!

Let's start with some basic definitions:

Credit Cards allow you to take out short term loans to finance every-day purchases. These loans are available up to a certain amount - your "credit limit." They're fast, convenient, and secure. At the end of the month, you can pay for the cumulative amount of the loan (your balance) or you'll be charged interest on the outstanding amount. Interest rates on credit cards are typically substantially higher than other loans. The card issuer may be a credit card company, a bank, or a private company working with a credit card company.

There are only four major credit card networks:

• Visa - The largest and most globally accepted credit card type in the western world. Visa cards always start with the number 4, and essentially all locations that accept credit or debit cards will accept Visa.
• Mastercard - As the second largest network of cards, Mastercard is also widely accepted. All Mastercards begin with the number 5.
• American Express - American Express is the fourth largest credit card brand in the US, but has a disproportionate number of wealthy card holders. Though not as commonly accepted as Visa or Mastercard, American Express members usually enjoy perks that those cards don't offer. All American Express cards begin with 34 or 37.
• Discover - The third largest credit card brand in the US, Discover also owns the Diners Club brand. It's less commonly accepted than Visa or Mastercard, though slightly more so than American Express. All Discover cards begin with the number 6.

Debit cards, by comparison, are issued exclusively by banks and credit unions (learn the difference between banks and credit unions here). They're like having an instant checkbook in your wallet. The money you spend on a debit card is instantly transferred out of your bank account to the vendor's bank account. That means that rather than hitting a spending limit as you do on a credit card, you can run out of money available to you on a debit card by running out of money in the bank account that's tied to the card. 

Whereas debit cards are usually offered free with a checking, savings, or money market account, credit cards often have an annual fee associated with them. This annual fee is in addition to any interest you accumulate in the course of carrying a balance on your credit card. 

The last big difference between a debit card and a credit card is that credit cards typically offer their card holders some perks or rewards for being a member. Those perks can be anything from travel upgrades to concierge services. It depends on the card, your financial standing as a card holder, and the card network as to what perks you'll get. These perks are paid for via both the interest that's generated off of cardholders who carry a balance, as well as the annual fee on the card.

Should I get a debit card or a credit card?
Debit cards are broadly seen as a better place for young people to start, since they don't allow you to go into debt and will force you to adopt responsible spending habits (or run out of money). The first time you have a card in your wallet, it becomes very easy to spend money. An all too common problem for first time credit card holders is spending more money than they can pay back at the end of the month, and having to carry a balance on the card. These balances are charged a high rate of interest, which can be debilitating for those in a precarious financial situation. 

However, debit cards don't allow you to build credit history, which can also be problematic for young people. Having a credit history is important when very large purchases become necessary - like cars and houses. The size of these items usually requires taking on a loan and banks want to see some experience with paying loans back regularly before they'll entrust you with a large amount of money. A credit card helps establish that understanding of debt, and therefore a credit history. 

There are many good first time credit cards than can help young people and those without credit history understand how to use debt. 

The bottom line is that you should probably start with a credit card, learn how to use it, and then get a beginners credit card to start establishing credit history. Make sure you find one that fits your lifestyle, there are hundreds of options.

Banks are a nearly ubiquitous institution in modern life. Virtually everyone has a bank account and most have multiple accounts, credit cards, mortgages, investments and more. Where do credit unions fit in though? This is one of the most common questions and misconceptions in the financial industry. You're not alone and we're here to help!

What is a Bank?
Banks are for-profit financial services organizations that store money and offer a variety of services to account holders. One of the biggest reason that banks exist, other than being a safe place to store money, is to issue loans. Those loans have interest and fees that deliver profit to the banks. In this way, banks are able to sustain their operations. Banks also commonly offer low interest instruments like CDs or Certificates of Deposit that they can make money on by loaning that money at a higher interest rate. 

What is a Credit Union?
A credit union is a financial services organization that is a not for profit entity - specifically, a cooperative. Because of their non-profit status, the fees that credit unions have on their loans tend to be lower and the interest rates on the loans tend to be lower. Similarly, the interest rates on deposits at credit unions tend to be higher than at traditional banks. The financial products offered by credit unions are essentially the same as what are offered by banks but the terms are generally more consumer friendly. As cooperatives, credit unions have members and the institution exists to serve the membership. As a member of a cooperative, you are generally entitled to voting rights and an ownership stake in the enterprise. 

Unlike banks, credit unions are often only open to members that meet specific criteria. That might include employees of a business, members of a certain labor union, residents of a certain area or military veterans. Usually, membership is open to family members of qualifying individuals as well. 

It sounds like credit unions offer a lot of advantages over a bank. Is that true? 

This depends on the individual, but for many people, if you can qualify to be a member of a credit union, it can certainly have advantages over a bank. Some of those advantages are below:

1. More consumer friendly interest rates - When you're shopping for a loan or a credit card, interest rates are one of the most important things to consider. Credit unions, since they are non-profit entities, can offer interest rates that are usually lower than banks on both credit cards and other loans. The interest rates you can get on a car loan at a credit union, for example, can save you hundreds or thousands of dollars over the life of the loan.  NOTE: One area that this may not be the case is in mortgages. Since most mortgages are bundled and sold to a third party after the bank or credit union originates them, this market is very stable and credit unions can't help with the interest rates. That said, you may see lower mortgage origination fees from a credit union.
   The interest rates that credit unions offer on deposits are often also weighted in the consumer's favor. Savings accounts, CDs, and checking accounts will all see higher interest rates from credit unions than with banks as a general rule. 
2. Lower fees - Banks make a huge portion of their revenue on fees. While some fees are necessary to keeping a the bank or credit union open and covering their operating expenses, credit unions are non-profit organizations so they don't use fees to generate profits for the organization. That makes loan origination costs, overdraft fees, returned check fees and even wire transfer fees often lower than what banks offer.
3. Member focus - While many banks have exemplary customer service, at the end of the day, they answer to their shareholders and the board of directors. With credit unions though, the shareholders are the members, so there's a strong alignment with everyone who walks through the doors or calls the bank. The credit union exists to serve their members and most to an outstanding job of it. Furthermore, you can be assured that the terms and conditions on loans, the fees on accounts and the particular credit cards that a credit union offers were all designed with the members' best interests in mind. Contrast that to a bank where each of those is designed to maximize profit and you'll start to see some considerable improvements at credit unions. 

Situations in which banks are actually better than a credit union do happen.

​Just a few of those are below:

1. Travel - Many banks are national or international. As you travel, it can be much easier to find a branch of a large bank like US Bank, Bank of America or Wells Fargo, than a branch of a credit union. Similarly, most big banks have extensive networks of ATMs which gives you access to quick cash with no fee for the withdrawal. Contrast that to a credit union that probably only has a few ATMs and likely only in one city and it's potentially a big point in the banks' favor.
2. Technology - The larger national or international banks invest tens or hundreds of millions of dollars into technology improvements each year. That means that those banks will have mobile apps, easy to use websites and full featured online banking. Credit unions on the other hand tend to be small and therefore cannot afford the huge expenditures of the larger banks. They often suffer from slow adoption of new technology, leaving their members at very real disadvantages in convenience and sometimes even security.
3. Fewer financial products - Since most credit unions are small, they can only offer a limited number of financial products. Those commonly include checking and savings accounts, credit cards and basic loans. Banks on the other hand tend to have more account holders so they can offer a fuller suite of products. Many credit unions don't offer mortgages, for example, but nearly all banks do. Banks will also offer other types of savings and checking accounts, business accounts, and home equity lines of credit. If you have specific needs that are more complex than basic accounts and loans, you may be forced to use a bank.

​So, should you use a bank or a credit union?

Many people use both. If your needs are more complex than basic checking and savings, a simple credit card and maybe a simple personal or car loan, a credit union may not be the right choice for you. In that case, it makes sense to use a credit union where you can for their lower fees and member-friendly policies, then use a bank when you have to for the financial products that you can't find elsewhere. If you travel frequently, it probably also makes sense to have a bank account that will allow you easy access to branches and ATMs in any major city and the convenience of a superior online banking experience. At the end of the day though, it's hard to argue with the fact that credit unions exist to serve their members and can save you considerable amounts of money with lower fees and better interest rates.