Why is usury considered a bad practice?

^{Luke 6:31} And as ye would that men should do to you, do ye also to them likewise. ³² For if ye love them which love you, what thank have ye? for sinners also love those that love them. ³³ And if ye do good to them which do good to you, what thank have ye? for sinners also do even the same. ³⁴ And if ye lend to them of whom ye hope to receive, what thank have ye? for sinners also lend to sinners, to receive as much again.

It is not a sin to love those that love you, nor to do good to those that do good to you, nor to lend to those from whom you hope to receive back your investment, but, since those that do these things already receive their reward in this life (6:24), there will be no further reward left for them in heaven.

Furthermore, the Old Covenant advises against lending with interest to a fellow Israelite (Deuteronomy 23:19-20); the same then applies, within Christianity, at least with regard to other fellow Christians; since Christ Himself taught that one's righteousness should exceed that of the scribes and Pharisees, in order to enter the kingdom of heaven (Matthew 5:20), Christians logically sought to extend this precept to non-Christians as well, since otherwise there would have been no discernible moral difference between it and Judaism.

Why is usury considered a bad practice?

Well, it may not be so bad... to see why we need to look at the original prohibitions in the Torah.

Exodus 22:25-27 25 “If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him. 26 If ever you take your neighbor's cloak in pledge, you shall return it to him before the sun goes down, 27 for that is his only covering, and it is his cloak for his body; in what else shall he sleep? And if he cries to me, I will hear, for I am compassionate.

Leviticus 25:35-38 35 “If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. 36 Take no interest from him or profit, but fear your God, that your brother may live beside you. 37 You shall not lend him your money at interest, nor give him your food for profit. 38 I am the Lord your God, who brought you out of the land of Egypt to give you the land of Canaan, and to be your God.

Deuteronomy 23:19-20 19 “You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. 20 You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it.

All future prohibitions are rooted in the Torah such that though they may seem exhaustive they are really not. There isn't a blanket prohibition against lending money at interest, but against money practices that take advantage of your brother or sister in their poverty. You can't even make profit off someone who is destitute or hold his cloak as collateral. The law in Deuteronomy seems to expand this to all Israelites and not just the very poor. It doesn't expand this to all foreigners though.

Jesus seems to teach that making a profit by lending money to financial institutions at interests is a virtue.

23 Why then did you not put my money in the bank, and at my coming I might have collected it with interest?’ -Luke 19:23

27 Then you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest. -Matthew 25:27

This is presumably because the financial institutions generally make more money off your money than they pay back in interest and everyone wins, unlike a destitute person who can barely make ends meet who will definitely lose.

God, nature, reason, all scripture, all law, all authors, all doctors, yea all councils are against usury. Philosophers, Greeks, Latins, Divines, Catholics, Heretics, all tongues, all nations, have thought usury as bad as a thief.

-Roger Fenton, 1612

There are a few different reasons why usury has historically been considered a bad practice.

First, it is unvirtuous. It is a lazy, unproductive, unskillful way to make a living. That is, the usurer is not contributing to the society with a particular skill set or mode of labor. (This argument commonly comes from religions, but is also present in ethics books, such as Aristotle's Nicomachean Ethics)

Second it is contrary to the nature of money, the purpose of which is exchange. Money is meant to be a stand-in for goods or services and is meant to provide a way to exchange one good or service for another. Usury contradicts the very purpose of money and is therefore wrong. (This is a largely non-religious argument that can be found in places like Aristotle's Politics)

Third, usury is unjust because it is a manipulation whereby one sells that which does not exist. That is, the usurer is selling the use of money, but there is no true difference between money and the use of money since money has no purpose apart from use. By definition, for money to be used is for money to be consumed. I could loan someone a car and charge them for using it, and then receive the car back when they are done with it, but money does not work this way. If someone uses the money then it is gone/consumed. No one would ever take out a loan without using the money. This argument was more plausible before complex financial systems were erected and ROI and opportunity cost were more or less guaranteed. (This is a Medieval argument that can be found in places like Thomas Aquinas' Summa Theologica)

A more modern argument against usury is that it creates "fake wealth" and results in problems like the "housing bubble." For example, suppose Joe lends Fred $100 at 10% interest. Fred does the same to Bob and Bob does the same to Joe. After the three-part transaction all three parties are entitled to an extra $10. But this $30 is not connected to any real thing in the world. Fake wealth has been created.