A federal appeals court reinstated a claim by a JPMorgan Chase & Co credit card holder accusing the bank of failing to properly disclose risk factors that allow it to suddenly raise rates.

The U.S. Court of Appeals for the Ninth Circuit said the bank failed to make clear and conspicuous disclosure of the annual percentage rates it could impose, as required under the federal Truth in Lending Act, by burying the reason for an increase in the fine print of a cardholder agreement.

According to a three-judge panel, Chase had been charging Cheryl and Walter Barrer an 8.99 percent annual rate, when the amount suddenly skyrocketed to 24.24 percent, a level that was close to a non-preferred or default rate.

Chase would maintain that it raised the rate after learning from a credit agency that the Barrers had too many loans and accounts, a conclusion they did not dispute.

But Judge Diarmuid O'Scannlain, an appointee of President Ronald Reagan, wrote that Chase's justification for the rate increase appeared on pages 10 and 11 of the Barrers' card agreement, five dense pages after the disclosure of the APR.

He said this was buried too deeply in the fine print for a reasonable cardholder to realize the bank could raise the APR not just for events of default, but for any reason at all.

The panel returned the case to federal district court in Oregon, which had dismissed the Barrers' claim, for further proceedings.

Chase spokeswoman Stephanie Jacobson said the New York-based bank does not comment on pending litigation.

The ruling was announced on the same day the U.S. Senate overwhelmingly approved a bill to curb sudden rate increases on credit cards. The House of Representatives approved a similar bill last month. President Barack Obama is expected to sign the measure into law later in May.

The case is Barrer v. Chase Bank USA, U.S. Court of Appeals for the Ninth Circuit, No. 07-35414.

(Reporting by Jonathan Stempel; Editing by Steve Orlofsky and Carol Bishopric)