Cheap Credit Cards Are Getting Scarce, Survey Indicates
Low-interest-rate bank credit cards are becoming more difficult to locate, according to a survey to be released today by Consumer Action, a San Francisco group.
Out of the 59 banks, thrifts and credit unions that Consumer Action surveyed, only three California institutions offered credit cards with rates at or below 16%, down from nine two years ago. And this year the consumer group was able to find only nine out-of-state companies offering low-rate cards, compared to 20 in 1987.
Although the sampling involved only a small fraction of the more than 1,000 companies that offer credit cards, the conclusion that low-rate cards are disappearing is true, said H. Spencer Nilson, editor of the Nilson Report, a Santa Monica newsletter that tracks credit cards.
“They (low-rate cards) are going out of style because you can’t make any money by offering them,” Nilson said. “There won’t be any cards at rates below 17% soon.”
Consumer Action said the lowest-rate credit card available in California is the 14% Mastercard or Visa offered by Bank of Canton. Second-best: Sacramento Savings, with a 14.25% card.
Glendale Federal Bank offers a 14.95% card, but to apply for it a consumer must have an existing relationship with the thrift, Consumer Action said. Others offering relatively low-rate cards include Sanwa Bank, Bank of San Diego and First Interstate Bank of California.
Most of the banks surveyed charged 19.8% on their credit cards.
Although Consumer Action urged consumers to save money by shopping around for low-rate cards, Nilson maintains that the average consumer will save less than $30 a year by doing so.
“The average person who is going to shop for low-rate cards is going to spend more on telephone calls than they are going to save on the card,” Nilson said.
Consumer Action said it will provide its survey free of charge to those who send a self-addressed, business-size envelope stamped with 45 cents’ postage to Consumer Action Credit Card Survey, 116 New Montgomery St., Suite 233, San Francisco, Calif. 94105.
LOWER-RATE PLASTIC Although the number of low-rate credit cards is dwindling, some California institutions offer rates below the predominant 19.80%. Many variables apply, including annual fee and grace period. Some lower-rate cards also have variable interest rates.
Source: Consumer Action
Grace Institution/ Annual Period Annual percentage rate Fee (days) Bank of Canton: 14.00% $15 25 Sacramento Svgs: 14.25% 20 25 Glendale Federal: 14.95% 17 None Sacramento Svgs: 15.00% 15 25 Sanwa Bank: 17.25% 15 25 Bank of San Diego: 17.90%15 25 First Interstate: 17.90% 25 25 Glendale Federal: 17.95% 20 25 Continental Savings: 18.00% 20 25 Placer Savings: 18.00% 15 25
Source: Consumer Action
