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DEBT'S REVOLVING DOOR; CREDIT CARD INTEREST RATES DIPPING, BUT BANKS HIKING, CREATING CONSUMER FEES.


Byline: Deborah Adamson Daily News Staff Writer

First, the good news: Credit card interest rates have come down in the last two years.

But the black cloud in that silver lining silver lining
n.
A hopeful or comforting prospect in the midst of difficulty.



[From the proverb "Every cloud has a silver lining".
? Other fees are up.

In a recent survey of 100 cards issued by 68 banks nationwide, Consumer Action of San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden  found out that average interest rates have dipped from 15.4 percent to 14.87 percent since 1995.

But banks have quietly raised existing fees by a range of 17 percent to 26 percent, and created new ones, the consumer advocacy group said.

``They really inched (fees) up there without people noticing,'' said Linda Sherry, a director at Consumer Action. ``This year, there was just a flood of them.''

Fierce competition for credit-worthy customers are keeping interest rates down. Competition is also responsible for half of credit card companies waiving annual fees today, compared with just a handful five years ago, according to the American Bankers Association The American Bankers Association (ABA) is comprised of banks and other financial institutions. It seeks to promote the strength and profitability of the banking industry by Lobbying federal and state governments, building industry consensus on key issues, and providing products and  in Washington.

So, banks are raising other rates to make up for the lost revenue and because of the record number of personal bankruptcies. When a person files for bankruptcy, it usually voids any unsecured debt Unsecured debt

Debt that does not identify specific assets that the debtholder is entitled to in case of default.
 such as credit cards.

``Banks are having to look at new ways to build back those margins,'' said Nancy Ness Judy, spokeswoman for the banking trade group. ``In most cases, they are penalty fees. We think that's appropriate.''

Judy said the fees mainly affect delinquent or late-paying customers.

For instance, the average late-payment fee rose 26 percent in two years - from $13 to $16.50. In 1995, not one card surveyed by Consumer Action charged more than $18 as a late fee. Today, 46 cards have late fees of $20 or more.

Banks tightened the grace period for payments as well. In some cases, they charge a fee for payments even one day late.

Citibank used to give holders of its classic credit card 15 days beyond the due date before it assessed a fee. Last fall, it changed the policy - the check must be in hand by the due date. The late fee also was raised by $5 to $20.

The cards also penalize pe·nal·ize  
tr.v. pe·nal·ized, pe·nal·iz·ing, pe·nal·iz·es
1. To subject to a penalty, especially for infringement of a law or official regulation. See Synonyms at punish.

2.
 those who spend a lot.

In Consumer Action's 1995 survey, only one card charged a fee for going over the credit limit. This year, 47 charged between $20 to $25.

Advanta National Bank, for one, created entirely new credit card fees.

In May, Advanta informed some card holders that the company reserves the right to charge a $15 inactivity fee Inactivity Fee

A fee charged to investors whose trading activity meets their brokerages' criteria for an inactive account.

Notes:
Smaller, passive investors who make a small amount of trades are the most disadvantaged by the fee.
See also: Broker, Passive Management
 if their card is rarely used, plus $25 to close the account.

A spokeswoman for the bank said nobody yet has been charged these two fees.

NationsBank charges a $19 annual fee if the card is not used at least three times a year.

The GE Rewards Card charges a $25 maintenance fee to existing customers who do not pay at least $25 in interest a year. The fee is waived for new accounts.

Sherry urges consumers to read the terms of their credit cards carefully so they won't be surprised by any new fees or fee increases.

Unexpected pitfalls abound for unwary card holders.

For instance, the interest rate charged for cash advances are often higher than the regular rate on the account. Some purchases also carry higher rates.

For example, Wells Fargo Bank's classic card charges 20.05 percent for any cash advances, regardless of the card's current interest rate. In addition, any charges for lottery tickets, off-track betting or gambling are billed at the 20.05 percent rate.

When consumers miss a few payments and the account falls out of good standing with Wells Fargo, the interest rate could be raised to 23.9 percent.

Once the credit card company raises fees or interest rates, are consumers trapped into accepting the terms?

Not in California, Sherry said. Under state law, card holders can refuse to accept the new terms and continue to pay down debt under the old terms. But anyone who does that can't use the card anymore. While the balance could be transferred to another card, the card holder might be hit with a fee for the transfer.

LOW-RATE CARDS

Basic cards with the lowest interest rates

(V = variable, F = fixed)

Without annual fees:

AFBA AFBA Armed Forces Benefit Association
AfBA Affiliated Business Arrangements
AFBA Allied First Bancorp, Inc.
AfBA African Biographical Archive
AFBA Appalachian Fiddle & Bluegrass Association (Pennsylvania) 
 Industrial 11.40 percent (V) 800-776-2265

Bank of Canton Bank of Canton is the first Chinese-owned bank in Hong Kong. At the time, all the other banks in Hong Kong were foreign, primarily British, including the locally-incorporated but British-run Hongkong and Shanghai Banking Corporation.  (Calif. residents) 11.50 percent (F) 415-362-4100

Pullman Privileges Gold Card 11.50 percent (V) 800-785-5626

PNC PNC Purdue University North Central (Westville, Indiana)
PnC Point 'n Click
PNC Police National Computer
PNC People's National Congress (Guyana)
PNC People's National Congress
 AAA AAA: see American Automobile Association.


(Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied.
 Card (AAA members only) 12.49 percent (V) 800-250-6626

Metropolitan Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest.  13.90 percent (F) 800-837-6058

With annual fees:

Pulaski Bank & Trust $35 7.99 percent (V) 800-980-2265

Wachovia Prime for Life $88 8.50 percent (V) 800-241-7990

Federal Savings Bank Noun 1. federal savings bank - a federally chartered savings bank
FSB

savings bank - a thrift institution in the northeastern United States; since deregulation in the 1980s they offer services competitive with many commercial banks
 $33 9.35 percent (V) 800-374-5600

Simmons First National Bank $35 9.90 percent (V) 800-636-5151

Metropolitan National Bank $25 9.96 percent (V) 800-883-2511

SOURCE: Consumer Action. For a free copy of the survey, send a self-addressed stamped envelope A self-addressed stamped envelope (SASE), or just stamped addressed envelope (SAE) in the UK, is often just that: an envelope with the sender's name and address on it, with affixed paid postage and mailed to a company or private individual.  (32 cents) to Consumer Action - CC, 116 New Montgomery St., Suite 233, San Francisco, CA 94105. Consumer complaint hotline: 213-624-8327.

Box: LOW-RATE CARDS (See text)

Chart: (Color) CARDS WITH HIGH INTEREST RATES

CAPTION(S):

Box, Chart
COPYRIGHT 1997 Daily News
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1997, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Article Details
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Title Annotation:BUSINESS
Publication:Daily News (Los Angeles, CA)
Article Type:Statistical Data Included
Date:Jul 28, 1997
Words:855
Previous Article:A PICNIC FEAST; UNDER THE STARS, AT THE BEACH OR BY THE POOL.(FOOD)(Recipe)
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