Sovereign Bank uses Delaware branch to skirt credit card restrictions – Boston Globe

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Sovereign Bank’s only branch in Delaware, opened last year, is tucked into the corner of an office building here next to a Quiznos sandwich franchise. It has just one ATM, five employees, and no weekend hours.

But in filings with federal regulators, Sovereign has recently started calling this modest, 2,300- square-foot space its “main office,” instead of its corporate headquarters in Boston.

The reason: to avoid usury laws in Massachusetts and other states. Massachusetts, for instance, caps lending rates for banks at 18 percent. But Delaware effectively has no such cap, allowing Sovereign to charge as much as 30 percent interest per year for customers who are late on credit card payments.

Click on the link below for the full story from The Boston Globe:

via Sovereign Bank opens Delaware branch to skirt banking restrictions – Business – The Boston Globe.

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