U.S. Supreme Court to consider credit card notification

The companies that issue credit cards and those that hold credit cards will be watching the new Supreme Court case very closely. McCoy v. Chase Manhattan Bank, USA, will be heard by the Supreme Court during its next session, which begins in October. The case is a class-action suit that alleges credit card companies cannot retroactively increase the interest rate on a card without notification. The card issuer is claiming that there was notification – in the initial card holder agreement that was signed.

Source for this article: U.S. Supreme Court to consider credit card notification by Personal Money Store

The case of the credit card holder

In McCoy v. Chase Manhattan Bank, James A. McCoy is claiming that Chase Manhattan violated the law when it raised his credit card 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. McCoy claims that this modification was illegal under the new Truth in Lending Act.

How Chase bank sees this case

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.

Late payments on credit cards

This supreme court case started because of a late credit card payment. The Truth in Lending Act aims to make the unsecured loan companies that offer credit cards more transparent in what they are charging consumers. So what do you think: Should credit card companies be required to notify the card holders of every change they have already agreed to, or is the responsibility to read the agreement on the cardholder?