Consumers who live in certain parts or belong to certain groups see more than the tip of this competitive iceberg.
In Memphis, Leader Federal dropped its rate from 15.9% to 12.9% through March 31st for new or existing accounts. Boatmen's Bank (MO) is going to a 15.3% variable rate (from a fixed 17.8% rate), October 31st. The Boatmen's VISA is issued to consumers in Missouri, Illinois, Tennessee, Indiana, Arkansas, Oklahoma, and Kentucky.
Members of the AFL-CIO will see rates drop from 11.5% to 11.0%, October 15th, for the Union MasterCard issued by Bank of New York. The card carrried by nearly two million union members, has no annual fee and is administered by Union Privilege in Washington, DC.
The Automobile Club of Southern California rolled out a no-annual-fee card with an interest rate of 14.90%, October 1st. The MasterCard is being offered to 3.7 million club members with incentives to transfer balances without fees and without interest for 25 days.
Truth is: price shopping for a better credit card has never been easier. Consumers should not overlook local issuers, cards issued by credit unions, or cards marketed through large organizations. A few examples:
The Association of Retired Persons (AARP) offers its 33 million members a VISA card with a fixed 15.6% interest rate and $10 annual fee. Bank One, the AARP card issuer, has approved more than 750,000 accounts. Pentagon Federal Credit Union charges no-annual-fee and 12.9% while America First Credit Union in Ogden, Utah offers an 11.5% rate with a $10 annual fee. Hundreds of local issuers now offer bargain priced cards as part of package deals or to customers using other bank services.
Lest we forget, three major issuers announced price adjustments October 1st. Citibank, AT&T, Universal and the American Express Optima card have lowered rates by an additional 0.5% as a result of the drop in the prime rate.
AT&T's Universal card now carries an interest rate of 15.90% (prime +9.9%) for non-charter cardholders and 14.90% (prime +8.9%) for charter cardholders. AT&T's new rates affect 10 million accounts.
The American Express OPTIMA card dropped to 14.25% for newer cardholders and to 12.00% for tenured cardholders. AmEx introduced a new tiered, variable interest rate in February of this year.
Citibank also dropped its rate on new purchases from 15.9% to 15.4% on standard VISA and MasterCards and from 13.9% to 13.4% for gold cards The rates apply to cardholders qualifying for Citibank Premier Membership. Approximately 9 million accounts will benefit.
The rate adjustments taking effect October 1st have pushed the average credit card interest rate below 18.00% and to its lowest level in at least twenty years. The October average of 17.98% is weighted to the size of each issuer. The straight average may soon plunge below 17.00% for the first time since 1978 when the average rate as calculated by the Federal Reserve stood at 16.98%.
GTE's new MasterCard announced late last month is an incredible short term bargain. The card carries a 6.0% interest rate and no annual fee until April 30th.
An average cardholder with a $2,000 balance could save more than $150 in interest charges (between now and the end of April) by switching to the new GTE card. Here is an opportunity ot get some breathing room and significantly reduce your outstanding balance.
After April 30th the rate increases to prime +10.4% or (if prime remains at 6%) 16.4%. The no annual fee policy will continue. In addition to reasonable pricing the GTE program offers calling card discounts and a number of other perks. For more information call 800-247-2566.
The Uniformed Services Benefit Association (MO) is now offering its low rate cards to the general public. USBA charges 10.5% (prime +4.5%) and no annual fee for the first year. In the second year USBA charges $20 for standard cards and $30 for gold cards.
USBA began offering a credit card program to its 100,000 members in July 1991.
For more information call 800-368-7030.
Citibank is now offering a secured VISA Gold or Gold MasterCard. The minimum deposit is $5,000, the maximum is $100,000. The card interest rate is 14% and the interest rate paid on the deposit is 5%. The $50 annual fee is the same as Citibank charges for its unsecured gold card.
Unlike Citi's unsecured standard card, the gold card remains secured for the life of the account.
The card is not available to applicants with previous bankruptcy or serious delinquency. For more information call 800-743-1332.
A new secured VISA program was launched this month by LivestockState Bank in Mitchell, SD. The new program requires a minimum deposit of $300 (which earns 3.5%) and a $60 application fee. The interest rate is 19.8% with $35 annual fee. Applicants with poor credit will be considered. For more information call 1-714-852-8125.
The interest rate war underway in the U.S. is spreading north of the border. Bank of Montreal, the largest MasterCard issuer in Canada, is lowering its variable rate card to 11.75%, November 1st. Meanwhile United Kingdom consumers are now offered free-for-life VISA gold cards by Cooperative Bank, although the bank upped income requirements October 1st.
Consumer concerns over high indebtedness has sparked one non-profit consumer group to offer "Credit Card Condoms".
The National Center for Financial Education, based in California, is offering the "Condoms" (small, credit card size, spun-bonded olefin envelopes) to consumers "afflicted with unsafe spending habits". The "Credit Card Condom" also comes with "instructions for Use and Preventing Debt." The basic idea is to slow up as credit card transaction to allow consumers a few extra seconds to ponder the purchase.
The "Condoms are part of NCFE's "Safe Charfe Kit". The kit contains 10 credit card warning stickers and booklets to help identify dangerous spending habit.
The NCFE instructional pakage is available by sending $3 to NCFE, Box Sc-34070, San Diego,Ca 92163.
