Bank of America Credit Card Rate Calculation Upheld by Court
Case: Milliken v.Bank of America N.A. (Dec. 29, 2025) – Ninth Circuit Court of Appeals
background: A lawsuit alleged that Bank of America (BofA) violated the Credit Card Accountability Responsibility and Disclosure (CARD) Act by how it calculated interest on variable-rate credit cards. Specifically, the plaintiff, Austin Milliken, argued that BofA’s practise of adding a fixed margin to the U.S. Prime Rate and applying that rate to the entire billing cycle was unlawful.
The Court’s Ruling: The Ninth Circuit Court of Appeals unanimously affirmed a lower court’s dismissal of the lawsuit, ruling in favor of Bank of America.
Key Points:
* CARD Act & Variable Rates: The CARD Act generally prevents credit card companies from raising rates on existing balances. However, it allows rate increases on variable-rate cards if the rate is tied to a publicly available index that the bank doesn’t control.
* BofA’s Method Complies: The court found that BofA’s method – using the Prime Rate as its index – fell within this exception. The Prime Rate is a publicly reported benchmark set by banks and influenced by the Federal Funds Rate, over which BofA has no control.
* Billing Cycle Submission is Legal: The court also upheld BofA’s practice of applying the month-end Prime Rate for the entire billing cycle, stating the CARD Act doesn’t require daily adjustments or a specific application date. The method ensures rate changes directly follow the index.
* No Retroactive Charges: The court rejected arguments that this method resulted in unfair retroactive charges, noting the same system would lower rates for cardholders when the Prime Rate decreased.
In essence, the court confirmed that BofA’s method of calculating variable credit card interest rates, based on the Prime Rate, is legally compliant with the CARD Act.
Further Information: The full court opinion is available here: https://www.aba.com/-/media/documents/extranet/banking-docket/12292025–milliken-v-bank-of-america–opinion.pdf?rev=81082d306d374554a40f745a846de5e4
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