CARD RATES LINKED TO PAST CREDIT : SURVEY SHOWS SIGNS OF TIER-PRICING TREND.

Byline: Laura Castaneda San Francisco Chronicle 

Some credit card issuers are linking the interest rates consumers pay to their credit histories, according to a survey released Monday by Consumer Action.

Under so-called tier-pricing, the better your credit history, the lower the interest rate you'll be offered, said Linda Sherry, editorial director of Consumer Action in San Francisco. If your credit is bad, you'll pay a higher interest rate.

That means you may not know exactly what interest rate you'll be getting until you get the credit card, which could hamper efforts to comparison shop, she said.

``It's the start of a trend that looks very ominous for consumers,'' Sherry said. ``When you apply for a credit card, you want to know what the rate will be. In this case they're saying `go ahead and apply, then we'll give you a rate.' This can waste your time and ultimately affect your credit rating because too many credit applications can be a red flag to some lenders.''

In the 1980s, credit card issuers were required by federal law to disclose the interest rates and other key conditions on their applications. However, some companies are ``being a little tricky about it,'' she said.

On its applications, Wells Fargo of San Francisco lists interest rates for its variable-rate credit cards of 18.15 percent, 16.15 percent and 12.75 percent, depending on credit history. A brochure warns consumers that interest rates could change if their credit record deteriorates because they miss a payment, for example.

``Wells is on more solid ground because it actually quotes rates,'' Sherry said.

But the tier-pricing system used by Household Credit Services in Salinas is based on how you use your credit and your payment behavior. The company would not disclose rates to Consumer Action or the San Francisco Chronicle.

Other offers may not tie interest rates to credit history, but they are still vague, Sherry said.

In its brochure, Providian Bancorp in San Francisco lists an annual variable percentage rate of zero for the first three months, escalating to between 5.9 percent and 15.9 percent after that. Providian says it will beat whatever nonintroductory rate you're paying now, but you don't know what rate you pay until you get the card. ``It's a guaranteed savings,'' said Providian spokeswoman Laurie Cole.

Sherry believes that Providian's range of interest rates is ``meaningless'' because the whole point of the disclosure box ``is to give people something to shop around with so they know what they're getting into.''

She recommends taking advantage of preapproved offers that state an interest rate. But you should still read the fine print carefully, because even some issuers of preapproved cards can raise the stated rate based on your credit.

The survey of 73 credit cards from 48 issuers by Consumer Action, a national consumer advocacy organization in San Francisco and Los Angeles, was conducted in April, Sherry said.

A copy of the survey is available free of charge to consumers who send a self-addressed stamped envelope to Consumer Action Credit Card Survey, 116 New Montgomery St. Suite 233, San Francisco, CA 94105.