Credit is flowing and card issuers are beating the bushes

Ever heard of a bank credit card called More Visa? Neither had a colleague here, who wondered if the mailing he had received about the card could be for real. The pitch was this: no annual fee to pay, a preapproved $2,500 line of credit, monthly payments lower than with other bank cards, and an automatic $500 cash advance.

The card, it turns out, is backed by Credit Thrift Financial Inc., in Evansville, Ind. Credit Thrift, a subsidiary of American General Corporation, an insurance firm, is one of nearly 400 companies that see opportunities in plastic cards. In the past two years a pile of them have entered the market, heightening competition that results in new services and financial terms for consumers.

New entrants seem to be aiming directly where you feel it most - your wallet. The major players in the business, such as Citicorp, Chase Manhattan, Bank of America, and American Express, are fighting it out over services - free travel insurance, cash machines, message services, club memberships, and rebates on consumer products.

Direct-mail credit card solicitations have been heavy for the last two years or so - ever since interest rates climbed down from all-time highs in 1981 and consumers began to feel comfortable again with the phrase ''charge it.'' Now that it's autumn, expect to see more credit card mail promotions. The companies are trying to sign you up in time for Christmas shopping.

With so many issuers peddling cards, ''it's easier to get credit because there's more of it available,'' says James Gudinas, managing director of financial services at the American Automobile Association, which backs a Visa card.

But Roberta Serafini, a certified financial planner in Boston, warns that ''you should read all the material'' in a promotion package before signing up. While the sales pitch may play up savings, it could also neglect to mention other costs.

For instance, the More Visa letter promised there's no annual fee, but it said nothing about finance charges. A call to the company uncovered an annual finance charge of 21.9 percent. The national average is 18.2 percent, according to Spencer Nilson, an authority on the credit card industry. Finance-charge ceilings vary from state to state, but since Credit Thrift issues all cards through a single bank in Columbus, Ohio, it can apply that state's interest rate nationwide. It's up to users to review their charging patterns and figure out if saving a $20 annual fee outweighs a new, higher finance charge.

The More letter also promises an automatic $500 cash advance as soon as the customer signs on - an advance that also runs a 21.9 percent financing charge, although the letter doesn't say so. While you get the check automatically, you are free, of course, not to cash it.

The question arises, just what is Credit Thrift? Is it ''safe'' to do business with? Ray Lasher, vice-president of marketing there, assures us it is. He emphasizes that the parent company is the fourth-largest insurance firm in the country.

Even if the issuer is an ''unknown'' to you, there is no need to be anxious, says Mark Silberman of Consumers Union, which publishes Consumer Reports magazine. ''They are offering you credit, not asking you to invest in them,'' he points out. ''In the worst case, if they do go bust, they'll sell their receivables (i.e., sell your account to someone else). It's not like you'd be losing an investment.''

Big players also try to win cardholders by eliminating annual fees or offering other financial incentives. Mr. Nilson believes Sears will soon get into the act with a no-fee or low-fee card. Four years ago, a Citicorp subsidiary launched Choice, a no-fee bank card operation based in Maryland and used in the mid-Atlantic states and Denver. The cardholder can be reimbursed for one-half of 1 percent of his total annual Choice billings, provided the billings top $600 a year. Choice makes up the difference through 21 percent finance charges.

But unless newcomers build a substantial client base, Nilson warns, they will not last long. ''I'm estimating 300 will go out of business. Five years from now , there will be 50 to 75 bank cards. The little ones can't make money from it - they need to have a lot of card holders.''

That leaves the big players to battle it out over services. Nilson bluntly comments that ''there are no new markets'' to be had and that the competition is mainly directed at swiping market share. The buzzword now is segmentation. While American Express was the first to market toward tiers of income earners with its regular green card, then gold card, and now platinum card, the other major card issuers have followed with the same idea. At the same time, the card companies are aggressively targeting women and students, giving young college graduates a chance to prove themselves with credit.

While services range from Citicorp's latest vacation rebates to discount car rental with a AAA Visa, ''there's no question that . . . a core group of services are important to a card,'' explains George Fesus, executive vice-president of MasterCard International. They include travel insurance, credit, ''a knowledge that emergencies can be taken care of through the card,'' cash advance availability, automatic teller service, and check cashing. ''Everything from there on drops off (in importance to consumers) very fast.''

Not only do card issuers try to convince you that their package of services is unbeatable, some suggest you need more than one bank card. Says an AAA Visa promotion now circulating in the Boston area: ''Even if you already have a Visa or MasterCard, you'll want to have a AAA/Visa card too - it gives you an additional line of credit. And you never know just when you'll need it.''

But the caution heard from time immemorial is ''never charge anything that you couldn't pay cash for,'' according to James Sullivan, a certified financial planner in Acton, Mass. And with bank fees of $20 to $65 charged for each of these cards, ''it's foolish to have more than one.'' Mr. Sullivan, however, distinguishes between Visa and MasterCard, both credit cards, and American Express, which is a charge card. Sullivan also notes that carrying too many cards can hurt a person's chances of getting a bank loan. The bank may surmise that the the extensive credit line - even if not used - gives a borrower too much potential for debt problems.

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