Religion & Liberty Online

When does interest become usury?

(Image credit: Associated Press)

“Usury humiliates and kills,” Pope Francis recently told the John Paul II Anti-Usury Non Profit Association in Italy. “Usury is a grave sin. It kills life, stomps on human dignity, promotes corruption, and sets up obstacles to the common good.”

Catholic social teaching condemns usury, yet many would be at a loss to define the term. Distinguishing it from charging interest on a loan often devolves into the vaguest generalities.

Philip Booth – a professor of finance, public policy, and ethics at the largest Catholic university in the UK (St. Mary’s University, Twickenham) – helps readers delineate the ethical difference between charging interest and demanding usury in his latest essay for the Acton Institute’s Religion & Liberty Transatlantic website.

Booth, a senior academic fellow at the Institute of Economic Affairs (IEA), begins with perhaps the most controversial lending arrangement:

Consider a payday loan. Such loans are typically small and are repaid over a short period of time. When their interest rates are “annualised” – calculated as if the loan were rolled over on the same terms, month after month, for a whole year – incredible rates of interest are quoted. However, it is, in fact, easy to reach a large figure for the interest rate without any substantial profit being made, simply because of the nature of the transaction.

For example, imagine a loan of £100 for two weeks, which involved an administration cost of only £5 and where this was the only cost passed on to the customer (with no allowance for interest, profit, or risk of non-repayment). The annual effective rate of interest on such a loan would be more than 250 per cent.

“Comparing the cost of a short-term loan with longer-term alternatives is like comparing the cost of renting a hotel room at a nightly rate for 365 nights with renting a house for a year,” he writes.

Booth goes on to explore the ethics of lending, the unintended consequences of anti-usury laws, and a brief comparison with Islamic money-lending practices.

Read Philip Booth’s full essay here.

Rev. Ben Johnson

Rev. Ben Johnson (@therightswriter) is an Eastern Orthodox priest and served as Executive Editor of the Acton Institute (2016-2021), editing Religion & Liberty, the Powerblog, and its transatlantic website. He has extensively researched the Alt-Right. Previously, he worked for LifeSiteNews and, where he wrote three books including Party of Defeat (with David Horowitz, 2008). His work has appeared at, National Review, The American Spectator, The Guardian, Daily Caller, National Catholic Register, Spectator USA, FEE Online, RealClear Policy, The Blaze, The Stream, American Greatness, Aleteia, Providence Magazine, Charisma, Jewish World Review, Human Events, Intellectual Takeout,, Issues & Insights, The Conservative,, and The American Orthodox Institute. His personal websites are and His views are his own.