Citibank Cuts Some Credit Card Rates : * Finances: The move by the nation’s largest issuer of Visa and MasterCard affects about 9 million clients. Other lenders are expected to follow suit.

Bowing to market pressures, Citibank on Thursday announced sharply lower rates for its best credit card customers, a move expected to finally force other large card issuers to drop their rates.

The move by the nation’s largest issuer of Visa and MasterCard was largely viewed as a defensive measure to keep Citibank’s best customers from defecting to such lower-rate competitors as American Telephone & Telegraph’s Universal card. Citibank’s action is nonetheless expected to spur such leading issuers as Chase Manhattan and Bank of America to also cut rates.

Citibank’s rate cuts were hailed by consumer activists, who have long complained that credit card rates have remained stubbornly high while rates on bank deposits have marched steadily downward. Anger over high credit card rates last year sparked an unsuccessful congressional attempt to establish a rate ceiling for credit cards.

Robert McKinley, publisher of a newsletter that tracks credit card rates, described the Citibank announcement as a watershed event. “The consumer is finally driving the industry,” he said. “The industry is forever changed.”

Citibank said the lower rates will be available on its two most popular versions of Visa and MasterCard. It said that for charges made after June 1, rates on its “Classic” Visa and MasterCard will fall to 15.9% and rates on its “Preferred” versions would drop to 13.9%. The current rate on the two kinds of cards--which have different fees and enhancements--is 19.8%.

The lower rates are only available to people with good payment records who have had a Citibank card for at least a year and who have charged at least $1,000 on Classic cards or $3,000 on Preferred cards since acquiring them.

Citibank said that the consumers who qualify--about 9 million of the 21 million people with Classic or Preferred cards--would automatically get the new rates, which float with changes in the prime rate. Card rates could shoot back up, the bank said, for people who make late payments or don’t spend enough.

Citibank’s new rate structure comes two months after American Express’ Optima card announced a similar rate revision. More significantly, Citibank’s announcement also comes as AT&T;’s Universal card is making an aggressive pitch for customers with a no-fee, 16.4% variable-rate card for people who transfer balances of at least $1,000 to AT&T.;

Though AT&T; declined to say how many customers it won from Citibank, Alan Schultheis, an executive vice president for Universal card, commented: “We know where our customers come from and Citibank has contributed its fair share. We’ve caused them some consternation--there’s no question.”

However, a Citibank spokeswoman said the bank was not responding to market pressures, but to demands from consumers. “Our card holders with good payment records have been asking us why they can’t get a better rate,” spokeswoman Susan Weeks said.

Analysts said not all Citibank’s good customers will benefit from lower rates because some pay their balances off each month. For this reason, lower rates are expected to cause only a slight drop in Citibank’s revenue from credit cards--an important money-maker for the bank.

Spokeswoman Weeks said the bank believes that lower rates will ultimately induce people to spend more, boosting revenue.