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. 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.

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

The side of the card holder

Credit card holder James A. McCoy is claiming that Chase Manhattan Bank violated the Truth in Lending Act when they increased his interest rate. After McCoy missed a credit card payment, Chase bank retroactively upped the interest rate on that month's transactions. The increase was outlined in the agreement for the card, but McCoy did not receive separate notification. The allegation is that this modification without notification is illegal under federal law.

The arguments of Chase Bank

Chase Manhattan Bank, who appealed this case to the Supreme Court, claims the company complied with the Truth in Lending Act. The TILA does require that these short term lenders deliver written notice of changes in the interest rates on cards. Chase bank points to one provision that excepts items previously agreed to in the cardholder agreement. In short, the debate comes down to the “natural” interpretation of the Truth in Lending Act provision versus the ambiguity of the language in the law.

Provisions for late payments in the agreements

The initial event that led to the McCoy v. Chase Manhattan Bank case was, in the end, in response to a late payment on a credit card. The Truth in Lending Act requires credit cards and unsecured loan companies to be transparent with their charges. What's your opinion: are cardholders responsible for reading and remembering the whole agreement, or should card companies be required to notify them of everything?