## Facts

- Rosemary Walker DeCristoforo opened two credit-card accounts with Citibank (South Dakota), N.A., a national bank located in South Dakota.
- DeCristoforo used the credit cards to purchase goods and services and to obtain cash advances.
- Citibank periodically sent billing statements to DeCristoforo and advised her that interest would be charged on unpaid amounts.
- DeCristoforo failed to pay the amounts due on either account.
- Citibank charged annual interest rates on overdue amounts that were allowed under South Dakota law and ranged from about 10.65% to over 50%.
- Citibank filed an action against DeCristoforo to recover the amounts it alleged she owed.
- DeCristoforo filed a counterclaim alleging Citibank violated 12 U.S.C. § 85 by charging interest greater than 7%.
- DeCristoforo moved for partial summary judgment, and Citibank cross-moved for summary judgment.

## Issues

1. Under 12 U.S.C. § 85, may a national bank located in South Dakota charge interest on a Massachusetts cardholder’s credit-card debt at rates permitted by South Dakota law, rather than being limited to 7%?
2. On the parties’ cross-motions for summary judgment, was DeCristoforo entitled to judgment on liability on her § 85 counterclaim, or was Citibank entitled to judgment as a matter of law on that federal usury theory?

## Decision

- The court held that 12 U.S.C. § 85 allows a national bank to charge interest at the rate allowed by the law of the state where the bank is located, even when the borrower resides in another state.
- The court rejected DeCristoforo’s position that charging more than 7% was automatically unlawful under § 85 in this context.
- On summary judgment, the court ruled consistently with that interpretation of § 85, resolving DeCristoforo’s federal usury theory against her and in Citibank’s favor to that extent.

## Legal Principles

- Under the National Bank Act, 12 U.S.C. § 85 permits a national bank to charge interest at the rate allowed by the law of the state where the bank is located, including for out-of-state credit-card customers.
- The “7 percent” language in § 85 operates as a default where the relevant state law does not provide an allowed rate; it is not a general ceiling whenever a borrower lives in a different state from the bank.
- A borrower’s claim that a national bank charged unlawful interest is analyzed under the National Bank Act’s interest-rate provision rather than under state usury limits that would otherwise apply to nonbank lenders.

## Conclusion

Citibank (South Dakota), N.A. v. DeCristoforo addresses whether a South Dakota national bank may apply South Dakota-permitted credit-card interest rates to a Massachusetts cardholder under 12 U.S.C. § 85. The court concluded that § 85 authorizes a national bank to charge the interest rate allowed by the law of the bank’s home state and therefore rejected the borrower’s attempt to impose a 7% cap based solely on § 85’s default-rate language, leading the summary-judgment rulings to follow that statutory interpretation.


Citibank (South Dakota), N.A. v. Rosemary Walker DeCristoforo, 28 Mass. L. Rptr. 139 (2011)