OPINION

MOSK, Acting C.J.

We granted review in this cause — which is one of numerous similar matters brought in federal and state courts throughout the nation — in order to consider the meaning and effect of section 30 of the National Bank Act of 1864. In pertinent part and without substantive change, the provision has been incorporated in section 5197 of the Revised Statutes of 1878, and has been codified in section 85 of title 12 of the United States Code (hereafter section 85), which is its common designation. As relevant here, it provides that a national banking association, or, more simply, a national bank, "may take, receive, reserve, and charge on any loan . . . interest at the rate allowed by the laws of the state . . . where the bank is located. . . ." (Italics added.) Our question is, "May the term `interest' be construed to cover late payment fees?" Our answer is, "Yes, if such fees are allowed by a national bank's home state."

I

Plaintiff Barbara Smiley (hereafter Smiley) filed a complaint in the Superior Court of Los Angeles County against defendant Citibank (South Dakota) N.A. (hereafter Citibank). Smiley purported to proceed on behalf of herself and all others similarly situated — specifically, the class of persons "who held or currently hold a Citibank credit card . . . while they were residents of California and while they maintained a California billing address, and who have contracted for or been charged a late charge on such credit card account." She alleged facts to the following effect: she was a resident of Los Angeles County; Citibank was a national bank chartered by the Comptroller of the Currency with its only address in Sioux Falls, South Dakota, and consequently located solely in that state; it issued credit cards under the "Visa" and "MasterCard" service marks; she held a Citibank "Preferred" Visa credit card and had held a Citibank MasterCard credit card; as a condition of the extension of credit, Citibank "charges a late charge of up to $15.00 upon California consumers who use its credit cards, irrespective of the outstanding balance or amount owing on the credit card in question," when they do not timely make a minimum payment; she had been charged late payment fees by Citibank on both her Preferred Visa and her MasterCard credit card accounts. On the basis of such allegations, she attempted to state various causes of actions arising under California law, including statutes and common law, going ultimately to the amount of the late payment fees in question, and sought various forms of relief.

Citibank filed in the United States District Court for the Central District of California a notice of removal of Smiley's action from state court to federal — its petition for removal. The sole ground on which it relied was diversity of citizenship — so-called "diversity jurisdiction" — under of section 1332(a)(1) of title 28 of the United States Code, which requires not only that the parties are "citizens of different States" but also that the "matter in controversy exceeds the sum or value of $50,000. . . ."

Subsequently, Citibank filed an answer in federal district court. One of the affirmative defenses was to the effect that Smiley's complaint failed to state facts sufficient to constitute a cause of action against Citibank: Smiley's pleading, which was based on California law bearing on the amount of late payment fees, was without support because that law was preempted as to Citibank through section 85 by operation of the supremacy clause.

Smiley then filed in federal district court a motion to remand the action to the superior court. Her ground was that diversity jurisdiction was lacking because, properly considered, the matter in controversy did not exceed $50,000.

Citibank in turn filed in federal district court a motion requesting leave to amend its petition for removal. It sought to add as a ground that the action, as a result of preemption, arose "under the Constitution, treaties or laws of the United States" — so-called "federal question jurisdiction" — under section 1441(b) of title 28 of the United States Code.

In due course, the federal district court filed an order denying Citibank's motion requesting leave to amend its petition for removal and granting Smiley's motion to remand. ( Smiley v. Citibank (South Dakota), N.A. (C.D.Cal. 1993) 863 F. Supp. 1156. ) It denied Citibank's motion as untimely, although it noted that, "[g]iven the strength of Citibank's preemption argument and the strong public interest in developing a uniform and consistent body of federal banking law, [it] understands Citibank's desire to adjudicate this dispute in federal court." ( Id. at p. 1162.) It granted Smiley's motion, accepting as meritorious her claim that diversity jurisdiction was lacking because, properly considered, the matter in controversy did not exceed $50,000.

Citibank then filed in the superior court a common law motion for judgment on the pleadings. Its ground was to the effect that Smiley's complaint failed to state facts sufficient to constitute a cause of action against it as a result of preemption through section 85. Smiley filed opposition. By leave of the court, the United States filed a statement of interest on behalf of the Comptroller of the Currency as amicus curiae in support of Citibank's position.

The superior court caused entry of a minute order wherein it denied Citibank's motion.

Citibank proceeded to file a petition for writ of mandate in the Court of Appeal, Second Appellate District, seeking to compel the superior court to vacate its order denying its motion and to enter a new and different order granting its request.

After soliciting and receiving opposition from Smiley, the Court of Appeal caused issuance of an alternate writ of mandate, compelling the superior court either to vacate its earlier order denying Citibank's motion and to grant its request or to show cause why, among other things, it should not be required to do so by peremptory writ.

Complying with the Court of Appeal's alternative writ of mandate, the superior court caused entry of a minute order. In that order, it vacated its earlier order denying Citibank's motion and proceeded to grant its request.

Thereupon, Smiley filed a notice of appeal in the superior court. That same day, the Court of Appeal discharged the alternative writ of mandate and dismissed Citibank's petition as moot.

Subsequently, the superior court filed an order, with reasons stated, granting Citibank's motion, and in accordance therewith filed a judgment of dismissal.

On appeal, the Court of Appeal affirmed. Agreeing with the superior court on preemption through section 85, a majority of two justices concluded that its order granting Citibank's motion should be sustained. Disagreeing, a single dissenting justice would have held to the contrary. The majority relied in large part on Greenwood Trust Co. v. Com. of Mass. (1st Cir. 1992) 971 F.2d 818 (hereafter sometimes Greenwood Trust), which construes section 85 in the course of construing a provision evidently modeled on its language, viz., section 521 of the Depository Institutions and Monetary Control Act of 1980 (hereafter DIDA), codified in section 1831d(a) of title 12 of the United States Code, which covers federally insured state banks and federally insured branches of foreign banks. They also relied on the position taken by the Comptroller of the Currency. For his part, the dissenter criticized the Greenwood Trust court's reasoning and the Comptroller of the Currency's views, the former at length and in detail and the latter less so.

On Smiley's petition, we granted review. We now affirm.

II

A

(2) An appellate court independently reviews a trial court's order on such a motion. (See Lumbermens Mut. Cas. Co. v. Vaughan (1988) 199 Cal.App.3d 171, 178-179 [ 244 Cal.Rptr. 567]; Crain v. Electronic Memories Magnetics Corp. (1975) 50 Cal.App.3d 509, 512 [ 123 Cal.Rptr. 419]; cf. 1 Childress Davis, Federal Standards of Review (2d ed. 1992) § 5.01, p. 5-6 [stating that a federal district court's order on the analogous motion for judgment on the pleadings under rule 12(c) of the Federal Rules of Civil Procedure (28 U.S.C.) is subject to "review . . . de novo"].) That is certainly proper. Independent review is called for when the underlying determination involves a purely legal question or a predominantly legal mixed question. (E.g., Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888 [ 264 Cal.Rptr. 139, 782 P.2d 278].) As stated, the determination here is such.

Finally, we as the court of last resort independently review a decision by a lower appellate court concerning a trial court's order on a motion of this sort. Indeed, we so review all such decisions. We have no need to defer, because we can ourselves conduct the same analysis. In fact, we have need not to defer, in order to be free to further the uniform articulation and application of the law within our jurisdiction.

B

The question that is central to our analysis involves section 85 — which, as stated above, provides that a national bank "may take, receive, reserve, and charge on any loan . . . interest at the rate allowed by the laws of the State . . . where the bank is located" — and the preemption of California law. It is clear that national banks are authorized to conduct credit card programs, to issue credit cards to holders, and to provide money thereunder to such persons and to others on their behalf in exchange for goods or services. (12 C.F.R. § 7.7378 (1995); see 12 U.S.C. § 24 (Seventh) [authorizing national banks to "loan money on personal security"].) It is also clear that, in thus providing money under credit cards, a national bank makes "loans" within the meaning of section 85.

As to preemption generally, the law is as follows.

The supremacy clause declares, in pertinent part, that "Laws of the United States . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." (U.S. Const., art. VI, cl. 2.)

(3) Since the decision in McCulloch v. Maryland (1819) 17 U.S. (4 Wheat.) 316, 427 [4 L.Ed. 579, 606], "it has been settled that state law that conflicts with federal law is `without effect.'" ( Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 516 [120 L.Ed.2d 407, 422, 112 S.Ct. 2608, 2617].)

Whether federal law preempts state law "fundamentally is a question of congressional intent. . . ." ( English v. General Electric Co. (1990) 496 U.S. 72, 79 [110 L.Ed.2d 65, 74, 110 S.Ct. 2270]; accord, Cipollone v. Liggett Group, Inc., supra, 505 U.S. at p. 516 [120 L.Ed.2d at p. 422, 112 S.Ct. at p. 2617]; Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1066 [ 31 Cal.Rptr.2d 358, 875 P.2d 73]; see, e.g., N Y Conference of Blue Cross v. Travelers Ins. (1995) ___ U.S. ___, ___-___ [131 L.Ed.2d 695, 704-706, 115 S.Ct. 1671, 1676-1677].)

Such preemption is found in "three circumstances." ( English v. General Electric Co., supra, 496 U.S. at p. 78 [110 L.Ed.2d at p. 74].) "First, Congress can define explicitly the extent to which its enactments pre-empt state law." ( Ibid.; accord, Cipollone v. Liggett Group, Inc., supra, 505 U.S. at p. 516 [120 L.Ed.2d at p. 422, 112 S.Ct. at p. 2617].) "Second, in the absence of explicit statutory language, state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively." ( English v. General Electric Co., supra, 496 U.S. at p. 79 [110 L.Ed.2d at p. 74]; accord, Cipollone v. Liggett Group, Inc., supra, 505 U.S. at p. 516 [120 L.Ed.2d at p. 422, 112 S.Ct. at p. 2617].) "Finally, state law is pre-empted to the extent that it actually conflicts with federal law." ( English v. General Electric Co., supra, 496 U.S. at p. 79 [110 L.Ed.2d at p. 74]; accord, Cipollone v. Liggett Group, Inc., supra, 505 U.S. at p. 516 [120 L.Ed.2d at p. 422, 112 S.Ct. at p. 2617].) (4) "Consideration of issues arising under the Supremacy Clause `start[s] with the assumption that the historic police powers of the States [are] not to be superseded by . . . Federal Act unless that [is] the clear and manifest purpose of Congress.'" ( Cipollone v. Liggett Group, Inc., supra, 505 U.S. at p. 516 [120 L.Ed.2d at p. 422, 112 S.Ct. at p. 2617].) That appears to be true of preemption generally. (See ibid.) It is certainly true of "field preemption" specifically. ( English v. General Electric Co., supra, 496 U.S. at p. 79 [110 L.Ed.2d at p. 74].) The "`historic police powers of the States'" extend to consumer protection. (E.g., California v. ARC America Corp. (1989) 490 U.S. 93, 101 [104 L.Ed.2d 86, 94, 109 S.Ct. 1661].) They extend as well to banking. (See National State Bank, Elizabeth, N.J. v. Long (3d Cir. 1980) 630 F.2d 981, 985-986 [57 A.L.R.Fed. 308]; cf. Lewis v. BT Investment Managers, Inc. (1980) 447 U.S. 27, 38 [64 L.Ed.2d 702, 713, 100 S.Ct. 2009] [under the commerce clause: "both as a matter of history and as a matter of present commercial reality, banking and related financial activities are of profound local concern"].) It must be recognized, however, that federal authority has also affected banking since before enactment of the National Bank Act in 1864. ( National State Bank, Elizabeth, N.J. v. Long, supra, 630 F.2d at p. 985.)

Turning to the case at bar, we must be precise concerning the question of preemption.

(5) The issue is not the existence of preemption under section 85. In Marquette Nat. Bank v. First of Omaha Corp. (1978) 439 U.S. 299 [58 L.Ed.2d 534, 99 S.Ct. 540] (hereafter sometimes Marquette), which happens to have concerned credit card programs at national banks, the United States Supreme Court held that section 85 does in fact preempt state law within its coverage, apparently under the rubric of "conflict preemption." Looking to section 30 of the National Bank Act, the source of section 85, the Marquette court held that the latter authorizes a national bank to demand and collect interest on any loan, even an interstate loan, at the rate permitted under its home state's law — even an unlimited rate ( Hiatt v. San Francisco National Bank (9th Cir. 1966) 361 F.2d 504, 506-507; see Daggs v. Phoenix National Bank (1900) 177 U.S. 549, 555-556 [44 L.Ed. 882, 884-885, 20 S.Ct. 732] [dealing with section 30 of the National Bank Act]) — notwithstanding the law of any other state. ( Marquette Nat. Bank v. First of Omaha Corp., supra, 439 U.S. at pp. 307-319 [58 L.Ed.2d at pp. 541-548].) In short, it concluded that the provision empowers such a bank to "export" its home state's interest rate. In reaching its result, it addressed an argument that the "`exportation' of interest rates . . . will significantly impair the ability of States to enact effective usury laws. This impairment, however, has always been implicit in the structure of the National Bank Act, since citizens of one State were free to visit a neighboring State to receive credit at foreign interest rates. [Citation.] This impairment may in fact be accentuated by the ease with which interstate credit is available by mail through the use of modern credit cards. But the protection of state usury laws is an issue of legislative policy, and any plea to alter § 85 to further that end is better addressed to the wisdom of Congress than to the judgment of this Court." ( Id. at pp. 318-319 [58 L.Ed.2d at p. 548], fn. omitted.) In so many words, the Marquette court read section 85 as a choice-of-law provision, fixing the law of the national bank's home state relative to interest rates as the rule governing all loans, even interstate loans, notwithstanding the law of any other state. Section 85 thereby entrusts the question of the lawfulness of a national bank's interest rates to its home state and to its home state alone. (6a) The issue, to return to our theme, is not the existence of preemption under section 85, but rather its scope. Its resolution will depend on the meaning that the term "interest" bears within the provision.

We cannot find the meaning of the term "interest" in section 85 itself. The provision simply does not define the word. (E.g., Ament v. PNC Nat. Bank (W.D.Pa. 1994) 849 F. Supp. 1015, 1019; Watson v. First Union Nat. Bank of South Carolina (D.S.C. 1993) 837 F. Supp. 146, 150; Goehl v. Mellon Bank (DE) (E.D.Pa. 1993) 825 F. Supp. 1239, 1241; Nelson v. Citibank (South Dakota) N.A. (D.Minn. 1992) 794 F. Supp. 312, 317.)

Let us then proceed to consider the source of section 85, which is section 30 of the National Bank Act.

What we now call the National Bank Act was passed by Congress in 1864, in the midst of the Civil War, under the title, "An Act to provide a National Currency, secured by a Pledge of United States Bonds, and to provide for the Circulation and Redemption thereof." (Act of June 3, 1864, ch. 106, 13 Stat. 99.) It substantially repealed ( id., ch. 106, § 62, 13 Stat. 118) and superseded ( id., ch. 106, §§ 1-61, 63-64, 13 Stat. 99-118) a statute enacted in 1863, under the title, "An Act to provide a national Currency, secured by a Pledge of United States Stocks, and to provide for the Circulation and Redemption thereof" (Act of Feb. 25, 1863, ch. 58, 12 Stat. 665). Its title was altered in 1874 to "the national-bank act." (Act of June 20, 1874, ch. 343, § 1, 18 Stat. 123.)

In Marquette, the United States Supreme Court declared that the purpose of the National Bank Act was "to facilitate . . . a `national banking system'" ( Marquette Nat. Bank v. First of Omaha Corp., supra, 439 U.S. at p. 315 [58 L.Ed.2d at p. 546]) — "in part," as it had earlier stated in Tiffany v. National Bank of Missouri (1874) 85 U.S. (18 Wall.) 409, 413 [21 L.Ed. 862, 864] (hereafter sometimes Tiffany), to "provid[e] a currency for the whole country, and in part to create a market for the loans of the General government." Within this system, "[n]ational banks are instrumentalities of the Federal government, created for a public purpose, and as such necessarily subject to the paramount authority of the United States." ( Davis v. Elmira Savings Bank (1896) 161 U.S. 275, 283 [40 L.Ed. 700, 701, 16 S.Ct. 502]; accord, Farmers', etc. Nat. Bank v. Dearing (1875) 91 U.S. (1 Otto) 29, 33-34 [23 L.Ed. 196, 198-199].)

In Tiffany, the United States Supreme Court declared that the purpose of section 30 of the National Bank Act, as it later stated in Marquette, was to grant national banks "`most favored lender' status" in their home states. ( Marquette Nat. Bank v. First of Omaha Corp., supra, 439 U.S. at p. 314, fn. 26 [58 L.Ed.2d at p. 545].) In Tiffany's words, the provision "was intended to give [national banks] a firm footing in the different States where they might be located. It was expected they would come into competition with State banks" — and others — "and it was intended to give them at least equal advantages in such competition." ( Tiffany v. National Bank of Missouri, supra, 85 U.S. (18 Wall.) at p. 412 [21 L.Ed. at p. 863].) "Most favored lender" status "was considered indispensable to protect them against possible unfriendly State legislation. Obviously, if State statutes should allow to their banks . . . a rate of interest greater than the ordinary rate allowed to natural persons, National banking associations could not compete with them, unless allowed the same. On the other hand, if such associations were restricted to the rates allowed by the statutes of the State to banks which might be authorized by the State laws, unfriendly legislation might make their existence in the State impossible. A rate of interest might be prescribed so low that banking could not be carried on, except at a certain loss. The only mode of guarding against such contingencies was that which, we think, Congress adopted. It was to allow to National associations the [highest] rate allowed by the State. . . . This construction accords with the purpose of Congress, and carries it out. It accords with the spirit of all the legislation of Congress. National banks have been National favorites. They were established for the purpose, in part, of providing a currency for the whole country, and in part to create a market for the loans of the General government. It could not have been intended, therefore, to expose them to the hazard of unfriendly legislation by the States, or to ruinous competition with State banks" — or others. ( Id. at pp. 412-413 [21 L.Ed. at pp. 863-864].) "In harmony with this policy is the construction we think should be given to the thirtieth section of the act of Congress we have been considering. It gives advantages to National banks over their State competitors. It allows such banks to charge such interest as" what was later called the state's "most favored lender." ( Id. at p. 413 [21 L.Ed. at p. 864].) Thus, the purpose of section 30 of the National Bank Act was to grant national banks "most favored lender" status in their home states — to protect them from possible unfriendly state legislation, whether such legislation was unfriendly in intent or effect. "The mechanism of referring to state law" — to take words written in a different context but nevertheless fitting here — "is simply one designed to implement that . . . intent and build into the federal statute a self-executing provision to accommodate to changes in state regulation." ( First National Bank v. Dickinson (1969) 396 U.S. 122, 133 [24 L.Ed.2d 312, 319-320, 90 S.Ct. 337].)

With this in mind, we can undertake to construe the term "interest" in section 30 of the National Bank Act.

Looking at the National Bank Act itself, we find no express definition of the term "interest" in section 30. The provision itself does not offer a meaning. Neither does any other.

Surveying the National Bank Act within its context, we discover a basis for inferring an implied definition of the term "interest" in section 30.

Around the time of the passage of the National Bank Act, according to one definition then current in American legal usage, "interest" was a "sum of money paid or allowed by way of compensation for the loan or use of another sum. . . ." (2 Burrill, A New Law Dict. and Glossary (1851) p. 629, col. 1.) According to another such definition, "interest" was the "compensation which is paid by the borrower to the lender or by the debtor to the creditor for its use." (1 Bouvier, A Law Dict. (10th ed. 1860) p. 652, col. 1.) As subsequently restated by the United States Supreme Court: "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. . . ." ( Brown v. Hiatts (1873) 82 U.S. (15 Wall.) 177, 185 [21 L.Ed. 128, 131].) This was the word's "plain meaning" (dis. opn. of Arabian, J., post, at p. 169) and "ordinary and commonly understood sense" (dis. opn. of George, J., post, at p. 179).

Thus, the term "interest" readily embraced a periodic charge based on a percentage of a certain sum, either the amount lent or some other, payable absolutely by maturity.

But the word was not so limited. As reported decisions demonstrate, it could include as well a late payment fee, payable contingently in the event of default after maturity. Such a fee could be calculated as a periodic percentage charge. (See Wilkinson v. Daniels (Iowa 1848) 1 Greene 179, 188; see generally, Annot., Provision for Interest After Maturity at a Rate in Excess of Legal Rate as Usurious (1933) 82 A.L.R. 1213, 1214-1223 [collecting pre- and post-National Bank Act decisions].) It could also be fixed as a flat fee. (See Craig v. Pleiss (1856) 26 Pa. 271, 271-272, 272-274; Wernwag et al. v. Mothershead et al. (Ind. 1834) 3 Blackford 401, 401-402; see generally, Annot., Provision for Interest After Maturity at a Rate in Excess of Legal Rate as Usurious, supra, 82 A.L.R. at pp. 1214-1223 [collecting pre- and post-National Bank Act decisions].)

In view of the foregoing, we believe that the term "interest" in section 30 of the National Bank Act should be construed to cover late payment fees, if such fees are allowed by a national bank's home state. Recall the definition of "interest" as a "sum of money paid or allowed by way of compensation for the loan or use of another sum" (2 Burrill, A New Law Dict. and Glossary, supra, p. 629, col. 1), or the "compensation which is paid by the borrower to the lender or by the debtor to the creditor for its use" (1 Bouvier, A Law Dict., supra, p. 652, col. 1). Such language easily encompasses late payment fees, as compensation for use of money, specifically, its retention, beyond the loan's term. Also recall the cited case law. It confirms the conclusion. Lastly, recall the statutory context. If "interest" were not read as indicated above, the purpose of facilitating a national banking system by granting national banks "most favored lender" status in their home states could be frustrated by unfriendly state legislation. Thus, a state could allow periodic percentage charges payable absolutely by maturity for all lenders, including national banks, but fix them at a rate so low that they could lend only at a loss. It might then allow late payment fees to some lenders, not including national banks, at a level high enough that they could lend at a profit. Such a result would be untenable.

This is not to suggest that, in using the term "interest" in section 30 of the National Bank Act, Congress did not employ the word in the sense of a periodic percentage charge payable absolutely by maturity. It evidently did. (See, e.g., Cong. Globe, 38th Cong., 1st Sess., supra, at pp. 1373-1376, 2123-2128.)

But it is to state that, in doing so, Congress did not employ the word only in that sense. Certainly, "rate" was not tied exclusively to that sense. (See fn. 8, ante; see also Sherman v. Citibank (South Dakota) (1994) 272 N.J. Super. 435, 447 [ 640 A.2d 325], cert. granted (1994) 138 N.J. 270 [649 A.2d 1289] [stating that "[w]hile interest rate . . . has been defined as the numerical percentage rate of interest, . . . the phrase need not be read so restrictively when construed in its statutory and historical context"].) By the time of the National Bank Act, banking had begun to change rapidly and radically. (See 2 Redlich, The Molding of American Banking (1951) pp. 85-98.) So too, had governmental responses to such changes. (See ibid.) Aware that state legislation unfriendly to national banks had been enacted in the past (see, e.g., Madeleine, Monetary and Banking Theories of Jacksonian Democracy (1943) pp. 21-22; see also McCulloch v. Maryland, supra, 17 U.S. (4 Wheat.) at pp. 400-437 [4 L.Ed. at pp. 600-609]), Congress was also aware that such legislation might be proposed in the future (see, e.g., Cong. Globe, 38th Cong., 1st Sess., supra, p. 1376). It was evidently to forestall unfriendly state legislation that Senator Sherman urged "most favored lender" status for national banks. (See id. at p. 2126; see also fn. 9, ante.) Congress must have known that unfriendly state legislation could be predicated on measures other than differential provisions concerning periodic percentage charges payable absolutely by maturity. Without question, it did not purport to limit protection to such charges. A limitation of this sort might not have been inappropriate in an ephemeral measure. But it would have appeared out of place in the National Bank Act. In the words of Representative Hooper, who "reported the bill that was to become the National Bank Act . . . to the House from the Ways and Means Committee" ( Marquette Nat. Bank v. First of Omaha Corp., supra, 439 U.S. at p. 315, fn. 28 [58 L.Ed.2d at p. 546]), the act was "not for a day" (Cong. Globe, 38th Cong., 1st Sess., supra, p. 1377). Quite the contrary. It was to perdure through the system of national banks that it established. Had Congress intended to limit protection, it would doubtless have made itself plain. It did not. Its silence is especially deafening when we consider that the immediate object of the National Bank Act was not the testing of an hypothesis concerning monetary theory, but rather the saving of the Union itself. (See id. at pp. 2128-2130.)

In the years since the enactment of section 30 of the National Bank Act, including its codification in section 85, we have discerned nothing to affect the coverage of the term "interest." Amendments there have been. But none has borne on the point with which we are concerned.

Consequently, we believe that the term "interest" in section 85 should be construed to cover late payment fees, if such fees are allowed by a national bank's home state.

Our construction of the term "interest" in section 85 accords with the decisions of practically all other courts. (See, e.g., Ament v. PNC Nat. Bank, supra, 849 F. Supp. at pp. 1018-1021; Tikkanen v. Citibank (South Dakota) N.A. (D.Minn. 1992) 801 F. Supp. 270, 274-280; Nelson v. Citibank (South Dakota) N.A., supra, 794 F. Supp. at pp. 316-320; Copeland v. MBNA America, N.A. (Colo. App. 1994) 883 P.2d 564, 565-566, cert. granted (Colo. 1994) 883 P.2d 564; Sherman v. Citibank (South Dakota), supra, 272 N.J. Super. at pp. 440-450; cf. Greenwood Trust Co. v. Com. of Mass., supra, 971 F.2d at pp. 829-830 [dealing with section 521 of DIDA: impliedly construing "the term `interest' [in section 85] to encompass a variety of lender-imposed fees and financial requirements which are independent of a numerical percentage rate," including, evidently, late payment fees on credit card accounts]; but cf. Copeland v. MBNA America, N.A. (D.Colo. 1993) 820 F. Supp. 537, 540-541 [criticizing reasoning set out in Greenwood Trust].)

Our construction is also in line with interpretations of the Comptroller of the Currency, who "is charged with the enforcement of the [federal] banking laws" ( Investment Co. Institute v. Camp (1971) 401 U.S. 617, 627 [28 L.Ed.2d 367, 376, 91 S.Ct. 1091]; accord, NationsBank of N.C. v. Variable Annuity Life Ins. (1995) ___ U.S. ___, ___ [130 L.Ed.2d 740, 747, 115 S.Ct. 810, 813]). (See, e.g., Off. of the Comptroller of the Currency, Notice of Proposed Rulemaking (Mar. 3, 1995) 60 Fed.Reg. 11924, 11940 [proposing to add subdivision (a) of section 7.4001 to title 12 of the Code of Federal Regulations, which would provide that "[t]he word `interest' as used in 12 U.S.C. § 85 includes . . . late fees"]; Off. of the Comptroller of the Currency, Interpretative Letter by Julie L. Williams, Chief Counsel (Feb. 17, 1995) pp. 9-11; Off. of the Comptroller of the Currency, Interpretative Letter by Robert B. Serino, Deputy Chief Counsel (Policy) (Aug. 11, 1988) pp. 5-8; Off. of the Comptroller of the Currency, Interpretative Letter by L.A. Jennings, Deputy Comptroller of the Currency (Feb. 24, 1955) p. 1; cf. Fed. Deposit Ins. Corp., Advisory Opn. by Douglas H. Jones, Deputy General Counsel, FDIC No. 92-47 (July 8, 1992) p. ___, Fed. Bank. L. Rep. (CCH 1992-1993 Transfer Binder) ¶ 81,534, p. 55,731 [opining that section 521 of DIDA gives a covered financial institution the "right to charge late fees . . . permitted by [its] home state which are either a component of interest or material to the determination of the interest rate"].)

Lastly, our construction conforms with views of commentators. (See, e.g., Clark Clark, The Law of Bank Deposits, Collections and Credit Cards (rev. ed. 1995) ¶ 15.09[2][c], pp. 15-56 to 15-61 especially pp. 15-59 to 15-60; Rosenblum, Exporting Annual Fees (1986) 41 Bus. Law. 1039, 1042-1044.)

Against our conclusion, Smiley argues that the term "interest" in section 85 may not, or at least should not, be construed to cover late payment fees, even if such fees are allowed by a national bank's home state. She asserts that the word should instead be interpreted as such compensation as is either "based on the amount of the loan balance" or "measured over time" or "required up-front as consideration for the loan."

Smiley's argument in favor of her own construction of the term "interest" in section 85 is unpersuasive. On its very face, her interpretation is peculiar. It is not supported by either reason or authority. Hence, it cannot be accepted. Certainly, it might produce untoward consequences. Specifically, it might effectively limit the variety of credit terms permitted on an interstate loan by a national bank, because any such term beyond its scope would be subject to the varying laws of the several states — a result that might "throw into confusion the complex system of modern interstate banking" ( Marquette Nat. Bank v. First of Omaha Corp., supra, 439 U.S. at p. 312 [58 L.Ed.2d at p. 544]), and thereby undermine the conditions for uniformity and efficiency that would otherwise obtain. To limit the variety of credit terms would obviously have an adverse effect on the national bank itself, whose freedom to lend on conditions it deems reasonable would be restricted. But it would have a correspondingly adverse effect on the national bank's potential customer, whose freedom to borrow on conditions he deems reasonable would also be restricted. To the extent that Smiley suggests that it is no longer necessary "to protect [national banks] against possible unfriendly State legislation" ( Tiffany v. National Bank of Missouri, supra, 85 U.S. (18 Wall.) at p. 412 [21 L.Ed. at p. 863]), she is wrong. States have continued to enact measures that are unfriendly in effect, if not in intent. (See, e.g., Fisher v. First Nat. Bank of Omaha (8th Cir. 1977) 548 F.2d 255, 258-261, 31 A.L.R.Fed. 792; Northway Lanes v. Hackley Union Nat. Bank Trust Co. (6th Cir. 1972) 464 F.2d 855, 861-864; United Missouri Bank of Kansas City v. Danforth (W.D.Mo. 1975) 394 F. Supp. 774, 779-785; Saul v. Midlantic Nat. Bank/South (1990) 240 N.J. Super. 62, 80-82 [ 572 A.2d 650].)

Smiley's argument against our construction of the term "interest" in section 85 is as unpersuasive as her argument in favor of her own.

In part, Smiley asserts that the term "interest" in section 85 may not be construed to cover late payment fees, even if such fees are allowed by a national bank's home state. To do so, she claims, would compel a conclusion that Congress failed to define the word itself, but rather delegated the task to the several states in violation of section 1 of article I of the United States Constitution, which "vests" in it "[a]ll legislative Powers [t]herein granted." That is simply not the case. Congress has made no such delegation. As shown above, it has itself defined the word, impliedly if not expressly, to cover late payment fees, if such fees are allowed by a national bank's home state. True, it has adopted in this regard, as by a choice-of-law provision, the usury law of the national bank's home state as the rule governing all loans by the bank in question, even interstate loans, notwithstanding the law of any other state. It has thereby entrusted the question of the lawfulness of a national bank's late payment fees to its home state and to its home state alone. But it has not thereby made a delegation. In United States v. Sharpnack (1958) 355 U.S. 286, 294 [2 L.Ed.2d 282, 288, 78 S.Ct. 291], the United States Supreme Court concluded that Congress did not delegate its legislative powers to the several states in the Assimilative Crimes Act of 1948, in which it adopted for each federal enclave the criminal law of the state in which such enclave is situated. (7) Here, we conclude that Congress did not delegate its legislative powers to the several states in section 85, in which it adopted for each national bank the usury law of the state in which such bank is located. (Accord, Tikkanen v. Citibank (South Dakota) N.A., supra, 801 F. Supp. at p. 280; Sherman v. Citibank (South Dakota), supra, 272 N.J. Super. at p. 449.)

In other part, Smiley asserts that the term "interest" in section 85 at least should not be construed to cover late payment fees, even if such fees are allowed by a national bank's home state. She says that the word as used in other contexts is of narrower compass. What is dispositive, however, is the word as used here.

Some of the non-section-85 authorities on which Smiley relies do not, in fact, show the term "interest" employed in a limited sense. Thus it is with section 521 of DIDA. Its purpose is "to achieve a measure of parity and competitive equity between national banks and" federally insured state banks and federally insured branches of foreign banks "by permitting" the latter "to enjoy the same `most favored lender' status that national banks enjoy." ( Hunter v. Greenwood Trust Co. (1994) 272 N.J. Super. 526, 533 [ 640 A.2d 855], cert. granted (1994) 138 N.J. 270 [649 A.2d 1289]; accord, VanderWeyst v. First State Bank of Benson (Minn. 1988) 425 N.W.2d 803, 805-807.) There is no suggestion that "interest" in section 521 of DIDA is more restricted than in section 85. But if there were, it would be based on a fact peculiar to the former, viz., that it was enacted, in part, as a response to a situation that was greatly concerned with "interest" in the sense of a periodic percentage charge payable absolutely by maturity: as a matter of national economic necessity, covered financial institutions could not prudently lend money unless they imposed charges that were relatively high ( Greenwood Trust Co. v. Com. of Mass., supra, 971 F.2d at p. 826); but as a matter of state law, they were required to impose charges that were relatively low ( ibid.). It scarcely needs mention that the "legislative history of [section 521 of DIDA], enacted in 1980, does not bear on the legislative history of [section 30 of] the National Bank Act, enacted in 1864." ( Nelson v. Citibank (South Dakota) N.A., supra, 794 F. Supp. at pp. 319-320.) We surely do not discern in section 521 of DIDA any understanding on the part of Congress that section 85 uses "interest" narrowly. Neither can we detect any intent by that body to implicitly "amend" the latter provision through the former.

By contrast, other of the non-section-85 authorities on which Smiley relies do indeed show the term "interest" employed in a limited sense — but, by definition, not in section 85. Thus, in United States v. Texas (1993) 507 U.S. 529, 535-536 [123 L.Ed.2d 245, 253-254 113 S.Ct. 1631, 1635-1636] — which does not even allude to section 85 — it is held that federal common law requires a party owing a contractual debt to the United States to pay "prejudgment interest," which evidently does not include "processing fees" or "penalty charges." But "prejudgment interest" under this rule has nothing to do with "interest" in section 85. Similarly, in section 102 et seq. of the Truth in Lending Act (hereafter TILA), which has been codified in section 1601 et seq. of title 15 of the United States Code, and its implementing administrative regulation, Regulation Z, which has been codified in part 226 of title 12 of the Code of Federal Regulations (1995) — neither of which even cites section 85 — "finance charge" is defined to include "interest" ( 15 U.S.C. § 1605(a)(1); 12 C.F.R. § 226.4(b)(1) (1995)) but to exclude, for example, late payment fees (12 C.F.R. § 226.4(c)(2) (1995)). But "finance charge" under this provision and regulation has nothing to do with "interest" in section 85. Moreover, the purpose of TILA is substantially different from that of section 85, inasmuch as the former "provides for full disclosure of credit terms rather than regulation of the terms or conditions under which credit may be extended" ( Johnson v. McCrackin-Sturman Ford, Inc. (3d Cir. 1975) 527 F.2d 257, 262, 34 A.L.R.Fed. 450), whereas the latter is concerned with the regulation of such terms and conditions insofar as they may be established by national banks. (8) In addition, Smiley specifically asserts that the term "interest" in section 85 necessarily excludes late payment fees (at least such as are calculated as flat fees) because they are "penalties." That is simply not the case. (See Sherman v. Citibank (South Dakota), supra, 272 N.J. Super. at p. 447 [stating that "there is nothing in the dictionary definition of interest which necessarily excludes late fees from the scope of that term"]; cf. Citizens' National Bank v. Donnell (1904) 195 U.S. 369, 373-374 [49 L.Ed. 238, 241, 25 S.Ct. 49] (per Holmes, J.) [implying that "interest" under section 30 of the National Bank Act may include overdraft charges].)

To the extent that Smiley maintains that late payments fees are, or at least were, unlawful per se under the common law, she is wrong. (See Annot., Provision for Interest After Maturity at a Rate in Excess of Legal Rate as Usurious, supra, 82 A.L.R. at pp. 1214-1223; Annot., Provision for Interest After Maturity at a Rate in Excess of Legal Rate as Usurious or Otherwise Illegal (1969) 28 A.L.R.3d 449, 454-465.)

To the extent that Smiley maintains that late payments fees are unjustifiable as a matter of policy, she is also wrong. As a general matter at least, late payment has no social utility. Indeed, it causes various costs relating to default, including collection — costs that may be especially high when, as is typically the case in credit card transactions, the underlying loan is unsecured. Late payment fees may be employed to impose default costs on late payers, who are responsible for them, and to avoid shifting them to timely payers, who are not. Fairness is served thereby: late payment fees make late payers shoulder the burden they themselves have created. In addition, the efficient use of limited resources is furthered: late payment fees deter late payers from creating the burden in the first place. Without question as to their legitimacy, differential periodic percentage charges payable absolutely by maturity are used to impose default costs, albeit prospectively on projected late payers, with higher or lower charges depending on the borrower's creditworthiness. It can be argued that late payment fees may properly be used to achieve the same end retrospectively on actual late payers: it may be said to be more equitable to require a given sum in late payment fees after the term of the loan from a borrower who turns out to be late than to extract the same — or perhaps a greater — sum through a higher periodic percentage charge payable absolutely by maturity throughout the loan's term from a borrower who proves himself to be timely.

Smiley may then be understood to argue that, even if the term "interest" in section 85 is construed to cover late payment fees, if such fees are allowed by a national bank's home state, it should not be deemed preemptive — or, in Marquette's word, "exportable" — against a sister state's law involving its "`historic police powers'" in consumer protection and banking, "`unless that [is] the clear and manifest purpose of Congress.'" ( Cipollone v. Liggett Group, Inc., supra, 505 U.S. at p. 516 [120 L.Ed.2d at p. 422, 112 S.Ct. at p. 2617].) As Marquette effectively holds, such a purpose may indeed be discerned in section 85. To the extent that she asserts that federal law may not preempt state law of this sort other than expressly, she finds no support in reason or authority.

Smiley may next be understood to argue that, even if the term "interest" in section 85 is construed to cover late payment fees, if such fees are allowed by a national bank's home state, it should not be deemed preemptive against a sister state's law beyond periodic percentage charges payable absolutely by maturity, or, perhaps more broadly, beyond such charges as are either "based on the amount of the loan balance" or "measured over time" or "required up-front as consideration for the loan." We do not see any logical basis for such a limitation. (See Tikkanen v. Citibank (South Dakota) N.A., supra, 801 F. Supp. at p. 277 [stating that "nothing in the language of section 85 supports a definition of interest that fluctuates according to whether the national bank seeks to apply the interest to interstate or intrastate transactions"]; Nelson v. Citibank (South Dakota) N.A., supra, 794 F. Supp. at p. 320 [stating that such a definition "is without statutory support" and is, in fact, "untenable"].) Neither do we see any practical ground therefor. Substance must prevail over form. Simply put, a borrower is equally affected by paying $15 in periodic percentage charges payable absolutely by maturity or $15 in late payment fees. (See First National Bank in Mena v. Nowlin (8th Cir. 1975) 509 F.2d 872, 878.)

Smiley may lastly be understood to argue that, even if the term "interest" in section 85 is construed to cover late payment fees, if such fees are allowed by a national bank's home state, it should not be deemed preemptive against a sister state's common law. She is unpersuasive. Her sole basis is section 521 of DIDA, which is inapplicable, or more accurately, her peculiar interpretation of that provision, which is overly narrow (see Hunter v. Greenwood Trust Co., supra, 272 N.J. Super. at pp. 537-540). Contrary to her underlying assertion as to the latter provision, Cipollone v. Liggett Group, Inc., supra, 505 U.S. 504, did not hold that "implied pre-emption cannot exist when Congress has chosen to include an express pre-emption clause in a statute." ( Freightliner Corp. v. Myrick (1995) ___ U.S. ___, ___ [131 L.Ed.2d 385, 393, 115 S.Ct. 1483, 1487].)

In making her various arguments, Smiley criticizes the reasoning of the Greenwood Trust court and the views of the Comptroller of the Currency. Since we have not relied on either except to show that the conclusions that we ourselves have arrived at are not novel, we need not respond to her complaints. (6b) We acknowledge that, to construe the term "interest" in section 85 to cover late payment fees, if such fees are allowed by a national bank's home state, would empower a national bank to "export" its home state's law of usury in that regard. We also acknowledge that such "exportation" of the usury law of a national bank's home state would prevent sister states from enforcing their own usury laws to that extent against the national bank in question by entrusting the question of the lawfulness of the national bank's late payment fees to its home state and to its home state alone. We cannot, and do not, ignore the immanent threat to efforts by sister states to provide such protection as they deem fit to consumers who reside therein. But — to follow Marquette — this displacement of the usury laws of sister states has always been implicit in the structure of the National Bank Act, since residents of one state have ever been free to visit another to receive credit subject to the latter's usury law, even when that law permits unlimited interest. This displacement may in fact be accentuated by the ease with which interstate credit is available by mail through the use of modern credit cards. The protection of the usury laws of sister states, however, is an issue of policy committed to Congress. Any plea to amend section 85 to further that end must be addressed to that body and not to this.

C

Applying the law as set out above, we must reject Smiley's contention that Court of Appeal erred in its conclusion upholding the superior court's order granting Citibank's common law motion for judgment on the pleadings.

Confining ourselves to Smiley's complaint and accepting as true all material facts alleged therein, we believe that the pleading does not state facts sufficient to constitute a cause of action against Citibank.

Smiley's complaint is based on California law bearing on the amount of late payment fees. It is, however, without support because that law is preempted as to Citibank through section 85. Citibank is a national bank. Its home state is South Dakota. Because the term "interest" in section 85 covers late payment fees, if such fees are allowed by a national bank's home state, it embraces Citibank's late payment fees, which are permitted by South Dakota pursuant to section 54-3-1 of the South Dakota Codified Laws Annotated. Whether California law would prohibit such fees, at least under certain circumstances, is of no consequence. That law is displaced.

Against our conclusion, Smiley argues to the following effect: her complaint "alleges" as a "material fact" that Citibank's late payment fees for its credit card accounts are not late payment fees within the meaning of South Dakota law, but rather "penalties"; if this "material fact" is accepted as true, California law bearing on the amount of late payment fees is not preempted as to Citibank through section 85; and if California law is not preempted in this regard, the superior court's order granting Citibank's motion was erroneous, and the Court of Appeal's conclusion upholding that order was erroneous as well.

We are not persuaded. Smiley's complaint simply does not "allege" as a "material fact" that Citibank's late payment fees for its credit card accounts are not late payment fees within the meaning of South Dakota law, but rather "penalties." Indeed, the pleading does not even allude to South Dakota law at all. With the premise of her argument gone, the conclusion falls of its own weight. In any event, we ourselves have considered the question independently, and conclude that the late payment fees in question are indeed late payment fees within the meaning of South Dakota law, and not "penalties."

III

Kennard, J., Baxter, J., Werdegar, J., and Ardaiz, J., concurred.