The Massachusetts Appeals Court on May 17 overturned a lower Massachusetts court ruling which held that credit card interest rates above 18% are unconscionable as a matter of law and a contract allowing such rates cannot be enforced. The lower court ruling was handed down on January 4, 2011 in a case involving a bank’s attempt to collect delinquent credit card payments.

Nutter Notes: The Massachusetts Appeals Court held that the lower court was mistaken when it applied Massachusetts common law in its determination that the interest rate applied by the bank was unconscionable. The bank, a national bank, was located in South Dakota and both parties agreed that the law of South Dakota, which permitted the interest rate charged by the bank, controlled all aspects of their relationship, the appeals court said.