The U.S. Court of Appeals for the Third Circuit has handed credit card banks another victory in their fight to overcome some states' limits on late-payment and over-limit fees.

Falling in line with the First Circuit appellate court and two state supreme courts, the Philadelphia-based Third Circuit ruled that the penalties constitute interest under the National Bank Act.

The decision thus reinforces credit card banks' ability to "export" the fees from their home states. The banks are hoping that the Supreme Court later this month will agree to review the cases and ultimately render a definitive judgment that will put the controversy to rest.

The Third Circuit ruling on Dec. 29 applied to Szydlik v. Associates National Bank, one of 11 credit-card-related cases before it. The three- judge panel remanded the others to state courts.

In the test case, Donald R. Szydlik claimed that California law did not permit the $15 late and over-limit fees charged by Associates National Bank of Delaware. His lawyers argued that the word "interest" in Section 85 of the National Bank Act did not apply, and therefore federal law should not preempt a state law.

The court opinion, written by Judge Jane R. Roth, said the fees "constitute interest because they provide mechanisms to compensate the lender for the increased lending risk associated with people who incur these kinds of charges."

Alan Kaplinsky, a partner in the Philadelphia law firm of Ballard, Spahr, Andrews & Ingersoll, called the ruling significant.

Mr. Kaplinsky, who has argued the banks' side in other cases, said the decision "provides a very useful precedent for the U.S. Supreme Court to use, assuming that the court does decide to grant review in one or more of the credit cases, which I am anticipating will occur."

The Supreme Court is expected to consider petitions for review from Dean Witter, Discover & Co.'s Greenwood Trust Co., Citibank (South Dakota), and MBNA America Bank of Delaware on Jan. 20 and 21.

In the context of late and over-limit fees, the cases raise a recurring question about federal preemption of states. A Supreme Court decision in 1978 allowed for the "export" of interest rates.

In fee cases, the banking industry has generally had the upper hand over consumer activists, who have claimed that the term "interest" does not include other charges.

A string of card-issuer victories ended in December 1994, when a Pennsylvania trial judge ruled in favor of the customers. That decision is on appeal with the Pennsylvania Supreme Court, which is expected to hear arguments Jan. 23.

State supreme courts in California and Colorado have ruled that banks can export the fees. But the New Jersey Supreme Court ruled against out-of- state lenders last Nov. 28.

In the latest appellate case, Judge Anthony J. Scirica, issued a partial dissent. He wrote that "Congress intended a uniform federal construction of the (National Bank) Act, and the majority's holding will subject the national banking system to the vagaries of the different states' interpretations."

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