Chase Manhattan Cuts Credit Card Rates : Lending: The move comes against a backdrop of increased competition in the industry.

NEW YORK — Chase Manhattan Corp. said Tuesday that it is offering eligible customers who hold its Classic and Gold cards the ability to pay lower variable rates or to waive the annual fee.

Starting in September, eligible Classic card members may switch to an annual 16.4% variable rate from the current 19.8% fixed rate. The new rate will drop to 14.4% in months when the total balance from purchases exceeds $2,500.

Gold card members, who currently pay a 17.5% fixed rate, may select a 15.4% variable rate that will fall to 13.4% when the total balance from purchases exceeds $3,500.

All variable rates are based on a formula tied to the prime rate, currently 6%. Classic accounts will be calculated at the prime plus 10.4% or 8.4% when the balance exceeds $2,500.

Gold card account purchase balances will be calculated at prime plus 9.4%, or 7.4% when total balances are above $3,500. Cardholders who prefer not to have a variable rate may retain the current fixed rate.

Chase was in great danger of losing cardholders to other lower rate cards if it kept a 19.8% rate, said James Daly, associate editor of Credit Card News in Chicago.

Besides retaining existing customers, another key element of Chase’s strategy is to encourage them to switch the balances from their other credit cards onto their Chase card, Thomas C. Lynch, chief of Chase’s credit card business, said in an interview.

Encouraging customers to switch their balances from competing cards is a relatively inexpensive way for banks and other credit card issuers to grow in an intensely competitive environment.

“Once you transfer a balance you immediately have interest-producing assets on your books,” said Daly.

To be eligible for the variable-rate cards, members must have been Chase account holders for at least 12 months and have responsibly managed the account by making timely payments and staying within credit limits, the bank said in a statement.