Funds News

JPMorgan faces lawsuit from credit card holder

* Suit says Chase raised rates on closed account balances

* Suit says rates increased from 11.99 pct to 17.99 pct

NEW YORK, Feb 12 (Reuters) - A former JPMorgan Chase & Co JPM.N credit card customer has sued the nation's second-largest bank, accusing it of raising the interest rate on his outstanding balance even after he closed the account.

In a lawsuit seeking class-action status and filed in the U.S. District Court in Chicago, Barry Woldman alleged that Chase told customers they could “opt out” of rate hikes by closing their accounts, but nevertheless boosted the rate he owed even after he exercised that right.

In some cases, including Woldman’s, Chase boosted rates on outstanding balances of closed accounts from 11.99 percent in October to 17.99 percent in November, according to the lawsuit.

Woldman holds an outstanding account balance of about $16,000, the lawsuit said.

Chase raised rates ahead of legislation that stops creditors from raising rates on existing balances unless borrowers are more than 60 days late with payments, according to the lawsuit. The legislation, known as the Credit Card Holder’s Bill of Rights, came into effect this year.

The lawsuit seeks compensatory damages, a declaration forcing Chase to honor opt-out agreements, and other remedies.

A JPMorgan spokesman declined to comment. A hearing in the case has been set for April 9, court records show.

The case is Woldman v. Chase Bank USA NA, U.S. District Court, Northern District of Illinois, No. 10-00865. (Reporting by Elinor Comlay; Editing by Gary Hill)