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Usury

Excessive or illegal interest rate.

Most countries now prohibit interest rates above a certain level; and rates which exceed these levels are called usury.

Usury is an ancient legal concept, well-known throughout the ages, and historically considered a sin.

"Nothing so vexed medieval thinking, nothing so baffled and eluded settlement, nothing was so great a tangle of irreconcilables as the theory of usury. Society needed moneylending but the Christian doctrine forbade it.

"Usury was considered to not be the charging of interest per se but charging at a higher rate than was decent.... (T)heologians and canonists argued endlessly and tried vainly to decide whether 10, 12.5, 15 or 20 percent was decent, the bankers went on lending and investing at whatever rates the situation would bear."1

In Canada, the Criminal Code, at ¶347, defines the crime of usury (called "criminal interest rate") as follows:

criminal rate means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds 60% on the credit advanced under an agreement or arrangement."

Research and Further Reading:

1. Tuchman, Barbara, A Distant Mirror: The Calamitous 14th Century, (New York: Knopf, 1978), p. 37-38.

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Unless otherwise noted, this article was written by Lloyd Duhaime, Barrister, Solicitor, Attorney and Lawyer (and Notary Public!). It is not intended to be legal advice and you would be foolhardy to rely on it in respect to any specific situation you or an acquaintance may be facing. In addition, the law changes rapidly and sometimes with little notice so from time to time, an article may not be up to date. Therefore, this is merely legal information designed to educate the reader. If you have a real situation, this information will serve as a good springboard to get legal advice from a lawyer.

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