Consumers : Cutting the Costs of Bank Credit Card Use : Personal finance: Diligent research can still unearth cards that boast lower interest rates or no annual fees.

By LYNN SIMROSS

Feb. 20, 1991 12 AM PT

TIMES STAFF WRITER

Shopping around for low-interest credit cards now that you can’t write off card-interest debt on your federal income taxes? You’ll have to hunt harder this year for bargain rate cards.

There are still some bank cards in the 14% to 16% bracket available--the national average rate for all credit cards, including department stores, is 18.8%--and diligence in searching for such cards can pay off, banking advisers insist.

But, you should go to reputable sources to get lists of financial institutions that offer low-rate or no annual fee cards.

“Most consumers who do switch to low-rate cards can easily save over $100 per year in interest costs,” says Elgie Holstein, director of Bankcard Holders of America, a national, nonprofit consumer credit advisory group.

For a $1.50 postage and handling fee, the group sends consumers its list of 35 banks that offer credit cards at interest rates of 16.5% and below. For an additional $1.50, you can get a list of cards with no annual fee. Write BHA, 560 Herndon Parkway, Suite 120, Herndon, Va. 22070.

Cardtrak, a monthly newsletter from Ram Research in Maryland, also offers information about banks with low-rate credit cards. It costs $5 per copy and is available by writing the firm at P.O. Box 17, Frederick, Md. 21702.

Consumer Action, a San Francisco consumer watchdog group, publishes a yearly credit card survey that lists California and out-of-state financial institutions with the lowest credit card rates and others that have no yearly fees. The newsletter is available free to consumers who send a self-addressed, stamped envelope with 45-cent postage to Consumer Action Credit Card Survey, 116 New Montgomery St., Suite 233, San Francisco, Calif. 94105.

But according to Consumer Action’s November, 1990, survey, the list of financial institutions with low-rate cards is dwindling.

In California, the survey found only three institutions issuing credit cards with interest rates at 16% or below; the lowest was 14% from the Bank of Canton.

From out-of-state banking institutions, there were only nine low-interest rate cards available to Californians. And Ken McEldowney, Consumer Action’s executive director, cautions that many of those have stiff credit requirements.

Included are Arkansas Federal Savings at 11.88% variable, (501) 224-7283; People’s Bank in Connecticut at 13.90%, (800) 423-3273; USAA Federal Savings Bank in Texas at 14.36% variable, (800) 922-9092; Ohio Savings Bank at 14.75%, (800) 962-2025; Pennsylvania Security Bank & Trust at 14.80%, (800) 327-0394; First Atlanta in Georgia at 14.88% (800) 241-7990; Connecticut National Bank at 15.00% (800) 431-4011; First Trade Union Savings in Connecticut at 15.00% variable, (800) 242-0273; Champion Federal Savings in Illinois at 15.90%, (800) 322-9335.

“What we’re witnessing is an industrywide trend away from lower rates to what looks like an industry standard of 19.80%,” said David Burnett, Consumer Action’s survey researcher. In California, Burnett found that more than one-third of the cards surveyed had rates of 19.80%. Nationwide, eight of the top 10 credit card issuers have 19.80% rates.

Consumer Action located 76 banks and savings and loans that offer no-fee cards, a nationwide increase from 54 last year.

McEldowney credits AT&T;’s Universal card, which was first offered last March, with “shaking up the industry and introducing price competition.”

The AT&T; card, a Visa or MasterCard issued through Universal Bank of Columbus, Ga., offers consumers no annual fee for their lifetime, providing the card is used for a purchase at least once a year. It’s current APR is 18.9%, but that is a variable rate tied to the prime interest rate. An AT&T; representative said the rate on its Universal card is scheduled to drop to 18.4% in March.

AT&T;’s no-fee-for-life promotion will continue through March 26, the one-year anniversary of its issuance. In addition to being a general purchase card, the AT&T; card also can be used for long-distance calls, providing cardholders with a 10% discount off AT&T;’s calling-card rate.

Still, if you already have a credit card with a bank or savings and loan, it might be smart to check with that institution before searching for other low-cost credit bargains.

Some offer lower rates for seniors. California’s Placer Savings, for example, permits cardholders above age 50 to qualify for a 16% rate and no annual fee. Others pay an 18% rate and $15 annual fee.

Other lending institutions give customers lower credit-card rates if they have additional accounts with them.

For instance, Security Pacific Bank charges a 19.80% rate on its credit cards to consumers without other qualifying accounts. But those with other accounts at Security--checking, savings, certificates of deposit, consumer, car or real estate loans--can receive a lower rate. With four different accounts with Security, a customer can get a 14.8% credit-card rate.

“Every single point of interest costs American credit-card holders $1.22 billion in interest per year,” says Consumer Action’s McEldowney.

“Obviously, each percentage point is important and individuals should choose cards with low APRs (annual percentage rates).”

LOWEST RATES AMONG CALIFORNIA INSTITUTIONS California banking institutions with the 10 lowest interest rates--known as the Annual Percentage Rate (APR)--on unsecured credit cards:

Bank of Canton of California (Visa/MasterCard) 14.00%

Sacramento Savings Bank (V/MC) 14.25%

--variable, with an interest rate cap at 19.75%.

Glendale Federal Bank, Federal Savings Bank (V), customer must have an account relationship with bank 14.95%

Sacramento Savings Bank (V/MC) 15.00%

Sanwa Bank California (V/MC) 17.25%

Bank of San Diego (V) 17.90%

First Interstate Bank of California (V/MC) 17.90%

Glendale Federal Bank, F.S.B. (MC), customer must have an account relationship with bank17.95%

Continental Savings (V) 18.00%

Placer Savings (V) 18.00%

--customers over 50 qualify for 16.00% APR.