Capital One defeats lawsuit alleging excessive credit-card rates

Capital One persuaded a Maryland federal judge on Monday to dismiss a proposed class-action lawsuit accusing the bank of charging excessive interest rates to credit-card customers.

U.S. District Judge Theodore Chuang rejected the claim that the federal National Bank Act forbade Capital One, one of the largest U.S. credit card issuers, from charging more than the maximum rates allowed in its home state of Virginia.

• The named plaintiff, Lynn Strange, said Capital One charged her a rate of around 30% for more than one year, even as she regularly paid interest and some principal on an outstanding balance that hovered around $2,000.

• She said her rate was “usurious,” being five times the maximum 6% rate she said Virginia allowed, and that she never “agreed” to the higher rate.

• Chuang, however, said Strange’s card agreement let Capital One change the terms, and the bank’s willingness to let Strange make purchases if she promised to pay her balances, charges and fees supported the changes.

• “The credit card agreement, while focusing more heavily on obligations by Strange, contains multiple provisions constituting commitments by Capital One and therefore generally is supported by consideration,” making it enforceable, the Greenbelt-based judge wrote.

• Chuang also said Virginia’s alleged 6% rate cap applied only to agreements without an express interest rate.

• Lawyers for Strange did not immediately respond to requests for comment. Capital One and its lawyers did not immediately respond to similar requests.

• Capital One’s headquarters are in McLean, Virginia.