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Interest rate increase upheld under prior law

WASHINGTON  — The Supreme Court says a credit card company legally increased the interest rate on a man’s card without telling him.

The high court on Monday ruled for Chase Bank USA and against James A. McCoy.

McCoy complained that Chase increased his interest rate due to his delinquency or default, and applied that increase retroactively. He says credit card regulations make that illegal because Chase did not notify him until after the increase went into effect.

The lower court had thrown out his lawsuit. Justice Sonia Sotomayor agreed, saying in a unanimous court opinion that the Federal Reserve Board’s interpretation of the regulations said Chase did not have to inform him of the rate increase.

“In the board’s view, Chase was not required to give McCoy notice of the interest rate increase,” she said. “We defer to an agency’s interpretation of its own regulation, advanced in a legal brief, unless that interpretation is ‘plainly erroneous or inconsistent with the regulation.’ Because the interpretation the board presents in its brief is consistent with the regulatory text, we need look no further in deciding this case.”

Congress changed the law in 2009 to require credit card companies to give a 45-day notice before raising interest rates.

The case is Chase Bank USA v McCoy, 09-329.