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Capital One defeats lawsuit alleging excessive credit card rates

Created at 20 Jul · 9:32 PM1 source↑ Market-relevant
IN SHORT

A federal judge in Maryland dismissed a proposed class-action lawsuit accusing Capital One of imposing excessive interest rates on credit card customers. The judge rejected claims that federal law forbade Capital One from charging an annual interest rate higher than the maximum 6% allowed in its home state of Virginia.

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Key Numbers

6%maximum annual interest rate in Virginia
$425 millionproposed settlement for savings account lawsuit
$2 billionestimated lost interest payments for savings account customers

Who's Involved

Theodore Chuang
U.S. District Judge in Maryland who dismissed the lawsuit
Lynn Strange
Plaintiff in the proposed class-action lawsuit
Capital One
Defendant in credit card interest rate lawsuit and savings account settlement
Consumer Financial Protection Bureau (CFPB)
Alleged Capital One froze savings account rates
Letitia James
New York Attorney General who opposed the savings account settlement
Capital One defeats lawsuit alleging excessive credit card rates

↳ Why This Matters

The dismissal of the credit card interest rate lawsuit means Capital One will not face claims of violating federal law regarding its credit card interest charges. However, the company is still navigating a separate, significant settlement related to its savings account interest rates, highlighting ongoing scrutiny of its customer interest practices.

Key facts

  • A federal judge in Maryland dismissed a proposed class-action lawsuit against Capital One.
  • The lawsuit alleged Capital One charged excessive interest rates on credit cards.
  • The judge rejected claims that federal law limited Capital One's rates to Virginia's 6% maximum.
  • Capital One is also facing a separate class-action settlement regarding savings account interest rates.

A federal judge in Maryland has dismissed a proposed class-action lawsuit that accused Capital One of charging excessive interest rates on its credit cards. U.S. District Judge Theodore Chuang rejected the plaintiff's argument that federal law prohibited Capital One from charging an annual interest rate higher than the 6% maximum allowed in Virginia, the company's home state.

Separately, Capital One is involved in a proposed $425 million settlement for a class-action lawsuit concerning its 360 Savings accounts. This lawsuit, filed in 2024, alleged that Capital One froze savings account rates for years, preventing customers from earning billions in interest payments, despite rising national rates. The Consumer Financial Protection Bureau (CFPB) had also sued Capital One for similar reasons, alleging misleading marketing of its savings accounts. New York Attorney General Letitia James and a coalition of 17 other attorneys general have opposed the $425 million settlement, arguing it would "shortchange" customers and fail to hold Capital One accountable for allegedly cheating them out of over $2 billion in unpaid interest.

Frequently asked questions

The lawsuit accused Capital One of imposing excessive interest rates on its credit card customers, violating federal law by charging more than the maximum 6% allowed in Virginia.

Capital One has agreed to a $425 million settlement for a separate class-action lawsuit concerning its 360 Savings accounts, though the settlement awaits court approval.

New York Attorney General Letitia James, leading a bipartisan coalition of 17 other attorneys general, opposed the settlement, arguing it was insufficient for customers allegedly cheated out of billions in interest.

What Happens Next

01A hearing is scheduled for November 6 for the proposed $425 million savings account settlement.
02Capital One customers eligible for the savings account settlement may receive payments.

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Cadence

How It Developed

A federal judge dismissed a proposed class-action lawsuit against Capital One.
The lawsuit accused Capital One of imposing excessive credit card interest rates.
The judge rejected claims that federal law forbade Capital One from charging rates higher than Virginia's maximum 6%.

Sources

T1
Capital One defeats lawsuit alleging excessive credit card ratesReuters
T2
See deadline to claim part of $425 million Capital One settlementusatoday.com

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