Notifying credit card holders of interest rates in front of Supreme Court

The Supreme Court will be hearing a new case that questions the responsibilities and rights of credit card holders and lenders. Verbal arguments in McCoy v. Chase Manhattan Bank will be heard during the next court session. 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

How the card holder sees the case

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. 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. This modification, McCoy alleges, was illegal under new federal regulations.

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. 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. Essentially, the debate comes down to interpretation versus ambiguously written laws.

Credit card payments at issue

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?