The U.S. Supreme court has announced that it will consider a case involving credit cards. In the next court session of the Supreme Court, McCoy v. Chase Manhattan Bank will be heard. The class action suit questions the ability of credit card companies to retroactively increase interest rates without notification of the cardholder. The card issuer is claiming that the card holder agreement could be considered notification of interest rate increases.
Article Source: U.S. Supreme Court to consider credit card notification by Personal Money Store
The credit card holder's case
Credit card holder James A. McCoy is claiming that Chase Manhattan Bank violated the Truth in Lending Act when they increased his interest rate. McCoy admits that he was late with a payment on his credit card, and because of that Chase bank increased the rate on all of his transactions for the month. McCoy had agreed to this increase by signing the cardholder agreement, but he did not receive separate notification of the increase. The allegation is that this modification without notification is illegal under federal law.
The defense of Chase Bank
Chase Manhattan Bank appealed this case to the Supreme Court, saying they did comply with federal law. TILA requires that written notification of changes to interest rates be provided by these short term lenders. The TILA has one provision that says if an item has been agreed to in the past, they do not have to re-notify the card holder. In the end, the debate is over ambiguity in the law versus natural interpretations.
Provisions for late payments in the agreements
A late credit card payment started this whole Supreme Court case. The Truth in Lending Act requires credit cards and unsecured loan companies to be transparent with their charges. What is your opinion: Should cardholders keep a copy of the agreement with them at all times, or should card companies provide multiple notifications?
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