What is the act of charging interest over the legal limit called?

The act of charging interest over the legal limit is known as usury. This practice is illegal in many jurisdictions because it exploits borrowers by taking advantage of their financial situations through exorbitant interest rates. Each state has specific laws that define what constitutes usury, typically setting a maximum interest rate that lenders may charge. When lenders exceed this limit, they can face serious legal consequences, including fines and the potential for the invalidation of the loan contract.

Understanding usury is crucial for both lenders and borrowers to ensure fair lending practices and to protect consumers from harmful financial practices. In contrast, terms like fraudulent lending, predatory lending, and excessive charging may describe unethical lending behaviors or high fees, but they do not specifically refer to the legal definition of charging interest beyond the allowable limits set by law.