As credit card issuers compete, users reap lower rates, fees


After years of pretending it was immune from the forces of the marketplace, the credit card industry has embraced price competition like a long-lost friend.

Perhaps it had no choice, considering another important development that has affected card issuers. Call it the end of the 1980s, the maturing of the baby boom generation or the fallout from the recession, but people are using credit cards more carefully -- charging less, keeping lower balances and paying off accounts faster.

The wiser use of credit and increased competition have made the choices of low-interest-rate and no-fee cards greater than ever, leaving people with even average credit histories no excuse for paying 18 percent or 19 percent on a credit card.

Today, the average credit card rate is about 16 percent, according to Frederick-based RAM Research Corp. That's well below the 18.53 percent average two years ago.

The skid in average credit card rates got a push when Citibank, the behemoth of the industry, with more than 50 million outstanding cards, began pushing its Visa card with a "private sale" offer to new customers of a 9.9 percent interest rate through Sept. 30.

Such lures to get people to switch to lower-rate cards seem to be working. At the end of 1992, $76.5 billion of credit card debt was accruing interest at rates below 16.5 percent, up from $13.1 billion in 1991, says RAM Research.

Some good card offers show up in your mailbox, but you may have to do some calling and comparison shopping to find a good rate.

The best place to start is with the card. Call the card issuer (a toll-free telephone number may be on the back of the card) and ask whether they are offering lower rates or fee waivers to new customers or to people who ask for them. If the bank has a choice between letting a good customer pay a lower rate or losing that customer altogether, it may elect to keep the customer at a lower rate.

You also can call some of the other institutions in the area to see what kinds of rates they offer. Keep an eye on magazine or newspaper ads for issuers in other states that may be offering better rates. Also, if you have a credit union at work, or if there's a credit card available for employees of your company or union, check it out.

Before mailing in any applications, call one or two of the credit bureaus in the area, such as TRW or Equifax, to make sure your file is current and free of errors.

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