Capital One Defeats Lawsuit Over 30% Credit Card Interest Rates
By CU Today Staff —
McLEAN, Va.— Capital One has won dismissal of a proposed class-action lawsuit accusing the bank of charging excessive interest rates on its credit cards, after a Maryland federal judge ruled the National Bank Act did not bar the company from charging rates above Virginia's general statutory limit, Reuters reported.
The decision is a victory for one of the nation's largest credit card issuers in a closely watched consumer lending case.
U.S. District Judge Theodore Chuang rejected claims by plaintiff Lynn Strange, who alleged Capital One charged her an interest rate of about 30% for more than a year while she carried a balance of roughly $2,000. Strange argued the rate was usurious because it exceeded what she said was Virginia's 6% maximum rate and contended she never agreed to the higher interest charges, Reuters said.
In dismissing the case, Chuang found Capital One's cardholder agreement gave the bank the authority to change account terms, including interest rates, and that the agreement was supported by valid consideration. He also ruled Virginia's alleged 6% interest-rate cap applies only to agreements that do not specify an express interest rate, undermining the plaintiff's central legal argument.
Originally reported by CU Today.