Security Pacific Trims Rates on Credit Cards

Joining a small but growing number of institutions cutting credit card interest rates, Security Pacific National Bank said Tuesday that it will establish tiered interest rates on its cards with a lowest annual rate of 16%.

However, to get the lowest rate, customers must have four accounts or other services--such as loans--with the bank. With no accounts or services, customers will continue to pay the current 20.4%.

The move by the Los Angeles-based bank, the nation’s 13th-largest bank card issuer, was hailed by credit card experts as the latest creative twist among card issuers amid growing pressure from consumers and lawmakers for lower card rates in line with lower rates for mortgages and deposits.

Rates at a few banks in some states, including California, have slowly dropped in recent weeks. In Connecticut, where a new state law setting a 15% ceiling on card rates has sparked a statewide rate war, interest charges have fallen to as low as 11.75%.

Some other banks have set up tiered rate structures, with lower rates available for customers with higher credit balances.

Usually Have Strings

However, many of the rate reductions have come with strings attached, analysts say.

Stockton-based American Savings, for example, recently cut its card rate to 15% from 18%--for California residents.

San Francisco-based Wells Fargo Bank cut its rate to 17% from 20%--for cardholders whose accounts were at least 5 years old.

Irwindale-based Home Savings of America cut its rate to 16% from 20.4%--but requires that cardholders also have some type of account or loan with the institution.

Security Pacific’s rate cut is similar to Home Savings’ except that to get the 16% rate, a Security Pacific MasterCard or Visa holder must have four types of accounts or loans with the bank: a checking-type account, a savings-type account, an auto loan or other type of personal loan and a mortgage or other type of home-equity loan.

With three of these accounts, the rate would be 17.4%; with two, 18.4%, and with one, 19.4%.

“We’re trying to get people to open up more accounts and do more services with us,” said Gregory J. Bjorndahl, senior vice president in Security Pacific’s California branch division. The new program will begin in October, Bjorndahl said.