The Supreme Court will be hearing a new case that questions the responsibilities and rights of credit card holders and lenders. McCoy v. Chase Manhattan Bank, USA, will be heard by the Supreme Court during its next session, which begins in October. 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 there was notification – in the initial card holder agreement that was signed.
Article Source: U.S. Supreme Court to consider credit card notification by Personal Money Store
The case of the credit card holder
James A. McCoy alleges that Chase Manhattan Bank violated the law when they increased the rate on his credit card. After McCoy missed a credit card payment, Chase bank retroactively upped the interest rate on that month's transactions. 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 case of the credit card issuer
Chase-Manhattan Bank appealed a lower court decision on this case to the Supreme Court, saying the Truth in Lending Act was complied with in this case. 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. Essentially, the debate comes down to interpretation versus ambiguously written laws.
Provisions for late payments in the agreements
A late credit card payment started this whole Supreme Court case. The Truth in Lending Act aims to make the unsecured loan companies that offer credit cards more transparent in what they are charging consumers. 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?
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