Credit Card Interest Rates Ruled Too High by Massachusetts Judge

In a developing area of law, a Massachusetts Superior Court judge ruled that Citibank (South Dakota) was charging an unconscionable rate of interest against a Massachusetts credit card user. The Court pointed out that “the general public is drowning in credit card debt” and that “unregulated interest rates and hidden fees the credit card companies charge..make it impossible for consumers to get out from under these debts.” Notwithstanding the agreement or “contract” between the credit card issuer and the consumer, the Court noted the one “sided nature” of those credit card contracts.

Once the interest rate is over 18%, “individuals must make monthly payments for years before putting a dent in their debt” wrote Judge Robert A. Cornetta, sitting in the Superior Court in Essex County, Massachusetts. “With interest rates as high as forty and fifty percent, a significant portion of the [defendant] debtor’s monthly payment goes toward paying interest without touching the underlying debt,” the Court stated.
It is likely that Citibank will appeal the judgment, and it is not clear if the Appeals Court will have enough president to uphold Judge Cornetta’s ruling, however, it is worth following the interest rate saga. After all, it was the disconnect on home mortgage interest rates that helped fuel the housing crash and economic recession that began in 2008.