Legal action has been undertaken by a New York law firm on the behalf of a Chase Manhattan credit card holder against Chase Manhattan on the allegation that the bank misled customers with an interest rate promotion.

The law firm Whalen & Tusa, P.C., which specializes in litigation to protecting the rights of consumers abused by corporate fraud, deception and mis-billing, has been retained to bring the action against Chase Manhattan Bank.

The action alleges that Chase misled customers into believing that they would get six months duration at a low percentage rate (APR) on balance transfers or cash advances. It appears in the offer to the cardholder in question that Chase cardholders can carry those balance transfers at the low promotional rate for six months or longer.

The credit card holder is said to have believed that any funds involved in the promotion would be subject to the full six months at the low rate while any payments made to the card would be credited against the usual balance which was subject to a higher APR.

Instead, Chase took any payment the credit card holder made for current purchases and always allocated that money to the balance transfer at the low interest rate and not to the money paid for current purchases on the card that month.

As a result, the cardholder now had a balance at a very high finance charge and less of the credit card loan at the low APR. The cardholder never got the chance to pay off the amount at the high finance charge until the cardholder paid off all the promotional rate loan money.