Maxed Out - how the banks avoid state credit card laws

[captain_kook]

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Here is a documentary on the credit card industry and how they've been allowed to operate under de-regulation, first the trailer:
 
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http://www.youtube.com/watch?v=Hb1MGccPtUs
 
the complete film:
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http://www.youtube.com/watch?v=vR2c_K8rbqQ
 

[captain_kook]

trailer:
 
]<a href="http://www.youtube.com/v/Hb1MGccPtUs" target="_blank">http://www.youtube.com/v/Hb1MGccPtUs</a>]
 
http://www.youtube.com/watch?v=Hb1MGccPtUs
 
film:
 
 
 
]<a href="http://www.youtube.com/v/vR2c_K8rbqQ" target="_blank">http://www.youtube.com/v/vR2c_K8rbqQ</a>]
 
http://www.youtube.com/watch?v=vR2c_K8rbqQ

[captain_kook]

The credit card industry - the big banks - sued for and won the right to issue cards from a different state than the state you and your bank are located in and to be thus exempt from certain  laws regarding credit card issued in your particular state.
 
 
So the name of your local bank shown on the card doesn't necessarily mean that the terms of your account are governed by your local laws.
 
South Dakota has some of the weakest usury laws in the country - practices that are illegal in many states are not illegal in South Dakota.

 
There's also no legal limit on interest charges, penalties and fees, and issuers are free to change the terms of the contract at any time without your consent - just continuing to carry a balance automatically voids your existing contract and obligates you to the new terms.
 
South Dakota Usury Laws


Update As pointed out by a user, and as is obvious when looking at the headquarters of major credit card companies, there is no usury limit in South Dakota (that's why those credit cards can have such high rates).
 
 
 
 The Statute:
"54-3-1.1. Rate of interest set by written agreement--No maximum or usury restriction. Unless a maximum interest rate or charge is specifically established elsewhere in the code, there is no maximum interest rate or charge, or usury rate restriction between or among persons, corporations, limited liability companies, estates, fiduciaries, associations, or any other entities if they establish the interest rate or charge by written agreement. A written agreement includes the contract created by § 54-11-9.
Source: SL 1982, ch 341, § 1; SL 1987, ch 360, § 4; SL 1994, ch 351, § 147."
From http://legis.state.sd.us/statutes/DisplayStatute.aspx?Type=Statute&Statu...


Watch "Maxed Out" for more info ^^6