Section 30 of the National Bank Act of 1864, Rev. Stat. § 5197, as amended, 12 U. S. C. § 85, provides that a national bank may charge its loan customers "interest at the rate allowed by the laws of the State . . . where the bank is located." In Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299 (1978), we held that this provision authorizes a national bank to charge out-of-state creditcard customers an interest rate allowed by the bank's home State, even when that rate is higher than what is permitted by the States in which the cardholders reside. The question in this case is whether § 85 also authorizes a national bank to charge late-payment fees that are lawful in the bank's home State but prohibited in the States where the cardholders reside—in other words, whether the statutory term "interest" encompasses late-payment fees.
Petitioner, a resident of California, held two credit cards— a "Classic Card" and a "Preferred Card"—issued by respondent,
These late fees are permitted by South Dakota law, see S. D. Codified Laws §§ 54-3—1, 54-3—1.1 (1990 and Supp. 1995). Petitioner, however, is of the view that exacting such "unconscionable" late charges from California residents violates California law, and in 1992 brought a class action against respondent on behalf of herself and other California holders of respondent's credit cards, asserting various statutory and common-law claims.
In light of the two dissents from the opinion of the Supreme Court of California, see 11 Cal. 4th, at 165, 177, 900 P. 2d, at 708, 716 (Arabian, J., dissenting, and George, J., dissenting), and in light of the opinion of the Supreme Court of New Jersey creating the conflict that has prompted us to take this case,
On March 3, 1995, which was after the California Superior Court's dismissal of petitioner's complaint, the Comptroller of the Currency noticed for public comment a proposed regulation
Petitioner proposes several reasons why the ordinary rule of deference should not apply to this regulation. First, petitioner points to the fact that this regulation was issued more than 100 years after the enactment of § 85, and seemingly as a result of this and similar litigation in which the Comptroller has participated as amicus curiae on the side of the banks. The 100-year delay makes no difference. To be sure, agency interpretations that are of long standing come before us with a certain credential of reasonableness, since it is rare that error would long persist. But neither antiquity nor contemporaneity with the statute is a condition of validity. We accord deference to agencies under Chevron, not because of a presumption that they drafted the provisions in question, or were present at the hearings, or spoke to the principal sponsors; but rather because of a presumption that Congress, when it left ambiguity in a statute meant
Second, petitioner contends that the Comptroller's regulation is not deserving of our deference because "there is no rational basis for distinguishing the various charges [it] has denominated interest . . . from those charges it has denominated `non-interest.' " Reply Brief for Petitioner 14. We disagree. As an analytical matter, it seems to us perfectly possible to draw a line, as the regulation does, between (1) "payment compensating a creditor or prospective creditor for an extension of credit, making available of a line of credit, or any default or breach by a borrower of a condition upon which credit was extended," and (2) all other payments. To be sure, in the broadest sense all payments connected in any way with the loan—including reimbursement of the lender's costs in processing the application, insuring the loan, and appraising the collateral—can be regarded as "compensating [the] creditor for [the] extension of credit." But it seems to us quite possible and rational to distinguish, as the regulation does, between those charges that are specifically as-
Finally, petitioner argues that the regulation is not entitled to deference because it is inconsistent with positions taken by the Comptroller in the past. Of course the mere fact that an agency interpretation contradicts a prior agency position is not fatal. Sudden and unexplained change, see, e. g., Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 46-57 (1983), or change that does not take account of legitimate reliance on prior interpretation, see, e. g., United States v. Pennsylvania Industrial Chemical Corp., 411 U.S. 655, 670-675 (1973); NLRB v. Bell Aerospace Co., 416 U.S. 267, 295 (1974), may be "arbitrary, capricious [or] an abuse of discretion," 5 U. S. C. § 706(2)(A). But if these pitfalls are avoided, change is not invalidating, since the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute with the implementing agency.
In any case, we do not think that anything which can accurately be described as a change of official agency position has occurred here. The agency's Notice of Proposed Rulemaking asserted that the new regulation "reflect[s] current law and [Office of the Comptroller of the Currency (OCC)] interpretive letters," 60 Fed. Reg. 11929 (1995), and the Statement of Basis and Purpose accompanying the final adoption stated that "[t]he final ruling is consistent with OCC interpretive letters in this area . . . and reflects the position the OCC has taken in amicus curiae briefs in litigation pending in many state and Federal courts," 61 Fed. Reg.
In addition to offering these reasons why 12 CFR § 7.4001(a) in particular is not entitled to deference, petitioner contends that no Comptroller interpretation of § 85 is entitled to deference, because § 85 is a provision that preempts state law. She argues that the "presumption against. . . pre-emption" announced in Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518 (1992), in effect trumps Chevron, and requires a court to make its own interpretation of § 85 that
Since we have concluded that the Comptroller's regulation deserves deference, the question before us is not whether it represents the best interpretation of the statute, but
Petitioner argues that the late fees charged by respondent do not constitute "interest" because they "do not vary based on the payment owed or the time period of delay." Brief for Petitioner 32-33. We do not think that such a limitation must be read into the statutory term. Most legal dictionaries of the era of the National Bank Act did not place such a limitation upon "interest." See, e. g., 1 J. Bouvier, A Law Dictionary 652 (6th ed. 1856) ("The compensation which is paid by the borrower to the lender or by the debtor to the creditor for . . . use [of money]"); 2 A. Burrill, A Law Dictionary and Glossary 90 (2d ed. 1860); 11 American and English Encyclopedia of Law 379 (J. Merrill ed. 1890). But see J. Wharton, Law Lexicon or Dictionary of Jurisprudence 391 (2d Am. ed. 1860). The definition of "interest" that we ourselves set out in Brown v. Hiatts, 15 Wall. 177, 185 (1873), decided shortly after the enactment of the National Bank Act, likewise contained no indication that it was limited to charges expressed as a function of time or of amount owing: "Interest is the compensation allowed by law, or fixed by the parties, for the use or forbearance of money or as damages for its detention." See also Hollowell v. Southern Building & Loan Assn., 120 N.C. 286, 26 S. E. 781 (1897) ("[A]ny charges made against [the borrower] in excess of the lawful rate of interest, whether called `fines,' `charges,' `dues,' or `interest,' are in fact interest, and usurious").
Petitioner suggests another source for the asserted requirement that the charges be time- and rate-based: What is authorized by § 85, she notes, is the charging of interest "at the rate allowed" by the laws of the bank's home State. This requires, in her view, that the interest charges be expressed as functions of time and amount owing. It would be surprising to find such a requirement in the Act, if only because it would be so pointless. Any flat charge may, of course, readily be converted to a percentage charge—which
Finally, petitioner contends that the late fees cannot be "interest" because they are "penalties." To support that dichotomy, she points to our opinion in Meilink v. Unemployment Reserves Comm'n of Cal., 314 U.S. 564, 570 (1942). But Meilink involved a provision of the Bankruptcy Act that disallowed debts owing to governmental entities "as a penalty," except for "the amount of the pecuniary loss sustained by the act . . . out of which the penalty . . . arose, with . . . such interest as may have accrued thereon according to law." Id., at 566. Obviously, this provision uses "interest" to mean only that interest which is exacted as commercial compensation, and not that interest which is exacted as a penalty. A word often takes on a more narrow connotation when it is expressly opposed to another word: "car," for example, has a broader meaning by itself than it does in a passage speaking of "cars and taxis." In § 85, the term "interest" is not used in contradistinction to "penalty," and
* * *
Petitioner devotes much of her brief to the question whether the meaning of "interest" in § 85 can constitutionally be left to be defined by the law of the bank's home State—a question that is not implicated by the Comptroller's regulation. Because the regulation is entitled to deference, and because the Comptroller's interpretation of § 85 is not an unreasonable one, the decision of the Supreme Court of California must be affirmed.
It is so ordered.
Briefs of amici curiae urging affirmance were filed for the State of Colorado et al. by Betty D. Montgomery, Attorney General of Ohio, Jeffrey S. Sutton, State Solicitor, Carter G. Phillips, and James M. Harris, and by the Attorneys General for their respective States as follows: Grant Woods of Arizona, Gale A. Norton of Colorado, M. Jane Brady of Delaware, Michael J. Bowers of Georgia, Jim Ryan of Illinois, Joseph P. Mazurek of Montana, Don Stenberg of Nebraska, Frankie Sue Del Papa of Nevada, Dennis C. Vacco of New York, Thomas W. Corbett, Jr., of Pennsylvania, Mark Barnett of South Dakota, Jan Graham of Utah, and James S. Gilmore III of Virginia; for Affinity Group Marketing et al. by Theodore W. Kheel; for the American Bankers Association et al. by Shirley M. Hufstedler, L. Richard Fischer, James A. Huizinga, and W. Stephen Smith; for Greenwood Trust Co. et al. by Arthur R. Miller, Alan S. Kaplinsky, and Burt M. Rublin; for the New York Clearing House Association by John L. Warden and Richard J. Urowsky; and for Trial Lawyers for Public Justice et al. by Ann Miller and Adele P. Kimmel.