What type of lending is typically exempt from usury laws?

The correct answer, which is credit cards, is tied to the way certain financial products are regulated regarding interest rates. Usury laws are designed to protect consumers from exorbitant interest rates on loans, but there are certain types of lending that often fall outside these regulations.

Credit cards, for instance, are typically subject to different regulations than personal loans or mortgage loans and can allow issuers to charge higher interest rates that may exceed the limits set by usury laws. This is largely because credit card agreements are usually governed by the laws of the state from which the lender operates, allowing for more flexibility in interest rate settings to accommodate the business models of credit card companies.

The other types of lending, such as personal loans, mortgage loans, and business loans, often have stricter regulatory frameworks and are more commonly subject to state usury laws, which dictate the maximum interest rates that can be charged to borrowers. Therefore, credit cards represent a unique case within the realm of lending where these laws may not apply as strictly, allowing issuers greater leeway in determining their rates.