In a victory for the old status quo, the Supreme Court ruled in favor of Chase in a class action suit disputing the bank’s right to raise interest rates retroactively for cardholders in default. The suit had originated before the CARD Act, which established a 45-day written notification for such rate changes. The ruling overrules an earlier 2004 appeals court decision which permitted to suit to proceed.
Chase said that in its cardmember agreement it disclosed the conditions that McCoy had to comply with to remain eligible for the lower interest rate, as well as the maximum interest rate that could apply if he violated those terms.
Chase said McCoy’s contract had explicit provisions that allowed for increased interest rates for cardmembers in default.
The Obama administration, reflecting the Federal Reserve Board’s views, supported the bank and said the old regulation did not require a credit card issuer to provide notice before increasing interest rates due to default.
Read more here: http://www.reuters.com/article/idUSTRE70N3I520110124
