We’ve all gotten those credit card offers in the mail or online and they sound great. Maybe we like the idea of having a little extra shopping money, or we’re in a bind and need a new credit card to pay a bill. Whatever our reasons, we can get into some sticky situations using credit cards, especially when the interest we’re paying on our purchases is high. Luckily, the Prairie State has some protections when it comes to interests rates. Here’s a brief summary of interest rates laws in Illinois.
Interest Rates Laws
Regardless of statutory limits on interest rates, consumers regularly agree to waive those limits and pay higher rates by clicking "I agree" online or signing a printed contract. Still, most states have so-called "usury" laws on the books, intended to prevent exorbitant rates. Illinois interest rate laws generally defer to contract law. One exception is a 9 percent limit on judgments, or 6 percent if the debtor is a local government, school district, or community college.
Interest Rates Laws in Illinois
The basics of Illinois interest rate laws and applicable codes are listed in the following table.
| Legal Maximum Rate of Interest | Determined by the laws applicable at the time the contract is made (815 ILCS 205/4) |
| Penalty for Usury (Unlawful Interest Rate) | Recipient subject to suit for twice total of all interest, charges, and attorney's fees and court costs (815 ILCS 205/6) |
| Interest Rates on Judgments | 9% or 6% when judgment debtor is unit of local government, school district, or community college (735 ILCS 5/2-1303; 735 ILCS 5/12-109) |
| Exceptions | Under Consumer Installment Loan Act (205 ILCS 670/1); short-term loans (815 ILCS 205/4.1a); installment loans (815 ILCS 205/4a; 205 ILCS 670/15); pawnbrokers (§205 ILCS 510/2); farm development loan (20 ILCS 3605/5 to 3605/12); reverse mortgage loan (205 ILCS 305/46) |
The best way to avoid extremely high interest rates is to do your best to avoid credit card debt in the first place. This is certainly easier said than done. Even if you do have credit debt, you still have some consumer protections under federal law as a consumer.
Related Resources for Interest Rates Laws
Figuring out those long credit card terms of service agreements and how the law applies can be confusing. If you would like legal help, you can contact an Illinois consumer protection attorney to discuss your case. For more general information on this topic, you can visit FindLaw’s section on usury laws and limits on credit card interest rates to learn more.
