McCoy v. Chase pits credit card holders and issuers

The Supreme Court will be hearing a new case that questions the responsibilities and rights of credit card holders and lenders. 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. Chase bank claims that because the increase is in the initial cardholder agreement, the rate increase did come with notification.

Article Resource: U.S. Supreme Court to consider credit card notification by Personal Money Store

The side of the card holder

James A. McCoy alleges that Chase Manhattan Bank violated the law when they increased the rate on his credit card. McCoy was late with his payment on the credit card, and Chase retroactively increased his interest rate on all 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 a lower court decision on this case to the Supreme Court, saying the Truth in Lending Act was complied with in this case. TILA requires that written notification of changes to interest rates be provided by these short term lenders. 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. 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.

Late payments on credit cards

This supreme court case started because of a late credit card payment. The Truth in Lending Act requires credit cards and unsecured loan companies to be transparent with their charges. What is your opinion: Should cardholders keep a copy of the agreement with them at all times, or should card companies provide multiple notifications?