Chingo De Dinero

I always wondered why my credit card company was located in South Dakota. I mean, I have no reason to think it is a bad place, but where my credit card would come?

So, the quick and easy reason is these two states have abolished usury laws. What exactly is usury, you might ask, think of it as the laws to protect people from USING other people. In particular, here, it is the interest rate you can charge. So, they can charge basically any interest rate they want. This is really great if you ask me, freer the better, we still have competition to protect us.

Next, I started thinking and why does it matter if they are where they are, I am in North Carolina, so NC laws should apply. Nope, wrong thinking…per “Marquette Nat. Bank v. First of Omaha Corp.”, the laws of where the bank is chartered is what matters. There you have it, since they are located where they are, they can charge you whatever they want.

On a side note, this is how some payday lenders get around interest rate caps (usury laws). The physical locations are just agents of the banks, which are in different states. Some states have closed this option, such as North Carolina :-(.

Also, Delaware seems like such a great place, at least by how free their state laws are…if it were only warmer, it would be heaven to me.