THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, April 22, 1996 TAG: 9604220075
SECTION: LOCAL PAGE: B2 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium: 59 lines
Liberal credit laws that don't place caps on credit card interest rates or fees are prompting some banks to ``move'' to Virginia.
Chevy Chase Bank of Maryland, a major credit card issuer with more than 2 million accounts, Key Federal Savings Bank of Randallstown, Md., and Riggs National Bank of Washington have recently filed applications with federal regulators in Washington to change their home addresses to Virginia.
The banks aren't expected to bring big numbers in jobs or people to the state, but they may use the moves to boost credit card rates and fees.
Robert M. Bouza, a senior vice president with Key Federal, said the state's flexible lending climate helped prompt the bank's decision to move.
``Virginia allows fees: late fees, over-the-limit fees, ATMs. There are no caps on the fees,'' he said, adding that money from fees help banks to offset low interest rates, payment delinquency and other charges.
Key Federal, still awaiting regulatory approval, has applied to move its credit card division from Delaware to Northern Virginia and to change its charter from a federal savings institution to a state commercial bank, Bouza said. The employees who process payments will be moved, he said, while the credit approval operation and executive offices will remain in Maryland.
Chevy Chase Bank, which had its application to move to a branch in McLean approved in mid-January, already has taken advantage of the liberal laws. The bank boosted the interest rate to as high as 26 percent on some credit cards, and started assessing a $20 fee on customers who exceed credit limits.
The industry's normal interest rate is 18 percent, said Ruth Susswein, executive director of Bankcard Holders of America, a nonprofit consumers' group in McLean.
Stephen R. Halpin Jr., an executive vice president for Chevy Chase, said Virginia's credit card laws were a factor in the decision to move, but said the interest rate change is not related to the move. Instead, he said it was a result of the bank's regular quarterly assessments of customer accounts.
In 1987, bankers in Virginia stopped an attempt by the General Assembly to cap credit card interest rates, claiming a cap would drive away credit card companies. They won another fight in 1992 when a law was passed allowing card issuers to impose unlimited late fees on card holders.
The Virginia Bankers Association credits the favorable lending and banking laws for helping it keep credit companies such as Capital One Financial Corp., which employs 3,095 people in the Richmond area.
One consumer advocate, however, thinks there's something wrong if other banks can begin calling the state home with little more than paperwork.
``The legislature was sold on the basis of all the jobs they were going to get,'' said Jean Ann Fox, president of the Virginia Citizens Consumer Council. ``If it turns out that it's just an address change on a letterhead and there's no impact on jobs, then what we end up with is less protection for consumers . by CNB