In the case of Barbara Smiley v. Citibank (South Dakota), N.A., 1995, the U.S Supreme Court ruled in favor of Citibank. The dispute arose when Ms. Smiley challenged Citibank's decision to increase her credit card late fee from $10 to $15 without notifying her beforehand or obtaining her consent for this change in terms and conditions. She filed a class-action lawsuit alleging that such fees were illegal under California law where she resided, as they exceeded state-imposed interest rate limits on loans. However, the court held that federal banking laws preempted state regulations regarding national banks' ability to charge late fees on delinquent accounts; hence, South Dakota law applied since it was where Citibank was based and had no cap on such charges. This ruling affirmed an earlier interpretation by the Office of Comptroller of Currency (OCC) which stated that "interest" under National Bank Act included late payment fees charged by credit card issuers.

In the dissenting opinion for Barbara Smiley v. Citibank (South Dakota), N.A., Justice Stevens argued that the majority's decision to allow banks to unilaterally change credit card fees was a misinterpretation of Section 85 of the National Bank Act. He contended that this section, which allows national banks to charge interest at rates permitted by their home state, should not extend to late payment fees as these are penalties rather than forms of interest. Furthermore, he criticized the Office of Comptroller’s interpretation allowing such changes without notice or consent from customers as an overreach and inconsistent with past practices. He also expressed concern about potential negative impacts on consumers due to lack of competition and regulation in banking industry.