It's only a dribble today; maybe one day it will be a steady stream. Here and there, a few banks and savings-and-loans are making modest reductions in the nearly usurious interest rates they charge on credit cards.
For more than a decade, while other interest rates rose, fell, rose, and fell again, the rate on credit cards has stayed about the same. Today, even with the prime lending rate for top industrial customers at 9 percent, mortgages at 10 percent or less, and auto loans at 12 or 13 percent, credit card rates seem to defy gravity, continuing to float up there around 18 or 19 percent, in some cases soaring at more than 21 percent.
But there are a few spotty signs of hope for those who carry month-to-month balances on their credit card accounts. True, most of the banks with lower rates are small, and they usually offer their cards only on a local or, at best, statewide basis. Also, announcements of lower rates are often accompanied by news of higher annual fees and shorter or no ``grace periods,'' where no interest is charged after a purchase.
But some banks have just plain dropped their rates.
At the First Mutual Savings Association in Pensacola, Fla., the rate has fallen from 18 to 15 percent, the 30-day grace period has been kept, as has the $18 annual fee.
It's the same story at the First National Bank of Mount Clemens, Mich., with the exception of the already lower $10 annual fee, which will not change.
Some banks are trying a ``tiered'' rate. The small ($65 million assets) First National Bank of Lincolnshire, Ill., charges 18 percent for balances under $2,500, 16 percent for balances between $2,500 and $10,000, and 15 percent on balances over $10,000. At the same time, the bank is advertising its card in national news and sports magazines.
Then there's the variable rate, a credit card version of the adjustable home mortgage. At PSFS, formerly Philadelphia Savings Fund Society, the nation's largest savings bank, the current floating rate is 16.24 percent, with an $18 annual fee and a 25-day grace period.
In many other cities, it is possible to call the banks and thrifts and find one or two that have lowered their credit card rates at least a little, to perhaps 16 or 17 percent.
In the nonbank area, several credit unions that issue credit cards have been dropping their interest rates. Many credit unions have no annual fee for their cards, according to the Credit Union National Association, and several of them have cut their rates to the 15 to 17 percent range.
But not a lot of credit unions are offering the cards. Of about 17,800 credit unions, only about 500 offer Visa or MasterCard, although some, like the US Employees Federal Credit Union, are very large.
``There have been some well-publicized drops'' in bank credit card rates, says Anthony W. Cyrnak, visiting economist at the Federal Reserve Bank of San Francisco. ``Most of them have been for competitive purposes. On average, rates have not fallen.''
``I think rates have started to come down a little,'' agrees Gail Liberman, editor of Bank Rate Monitor, a North Palm Beach, Fla., newsletter. ``One reason is that there's been a lot of pressure from the federal government and consumer groups.'' At least three bills have been filed in Congress that would create a link between credit card rates and some other index.
In the two House bills, credit card interest would be tied either to the Treasury-bill rate or the discount rate, the rate the Fed sets for loans between its banks. A Senate bill would link credit card interest to the penalty rate used by the Internal Revenue Service. These bills would have the effect of keeping credit card interest between 10 and 13 percent, Mr. Cyrnak says.
A national usury ceiling which was that far below the current prevailing rate of 18 or 19 percent would almost certainly result in a variety of other fees and charges being imposed on credit cards, he believes. In a 1983 survey, he notes, about 47 percent of all cardholders said they ``nearly always'' paid their outstanding balances every month, leaving the issuing banks with nothing but the annual fee to cover the paper work for these people.
Only 27 percent said they ``hardly ever'' pay in full every month and consistently incur a monthly finance charge. These are the people who support much of the banks' costs for credit cards. So almost all cardholders could expect higher fees if interest rates were forced down, Cyrnak contends.
One reason rates haven't dropped, bankers say, is that many banks lost money when overall rates were higher and they were prohibited by state laws from chaging more than 18 or 19 percent on credit cards.
``Banks lost a ton of money when the cost of funds was high,'' says Ronald Christian, vice-president for credit card administration at PSFS. This explains one reason many banks can offer lower rates now, he says. Some of them, including PSFS, weren't issuing credit cards when other rates were so high, so they don't have to make up for earlier losses.
If you pay your credit card balance in full every month, the interest rate won't matter, but the grace period will. Find a bank that gives you 20 to 30 days to get your check in. If there's no grace period, the bank starts tacking on interest as soon as it gets the merchant's bill.
If you do tend to keep a running balance, call the banks and thrifts in your area and do some comparison shopping. You just might find one that has discovered competition and is offering a lower rate.