The companies that issue credit cards and those that hold credit cards will be watching the new Supreme Court case very closely. Verbal arguments in McCoy v. Chase Manhattan Bank will be heard during the next court session. 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.
Source for this article: U.S. Supreme Court to consider credit card notification by Personal Money Store
How the card holder sees the case
James A. McCoy alleges that Chase Manhattan Bank violated the law when they increased the rate on his credit card. 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. Though McCoy had agreed to this interest rate increase when signing the cardholder agreement, the bank did not notify him before the rate increase went into effect. This modification, McCoy alleges, was illegal under new federal regulations.
The defense of Chase Bank
Chase Manhattan Bank appealed this case to the Supreme Court, saying they did comply with federal law. The TILA does require that these short term lenders deliver written notice of changes in the interest rates on cards. 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. Essentially, the debate comes down to interpretation versus ambiguously written laws.
Credit card payments at issue
This supreme court case started because of a late credit card payment. The amount that unsecured loan companies charge customers is required to be disclosed, according to the Truth in Lending Act. What is your opinion: Should cardholders keep a copy of the agreement with them at all times, or should card companies provide multiple notifications?