Security Pacific Bank extends credit card discounts after ruling by Federal Reserve.

Security Pacific Bank extends credit card discounts after ruling by Federal Reserve

Security Pacific Corp. will extend discounts on credit card interest rates to preferred customers in four states as a result of a recent ruling by the Federal Reserve Board.

Credit card customers with loans, deposits and other accounts in Security Pacific's Washington and Arizona banking subsidiaries will be eligible to receive the discounts in 1991, said William Capps, president and chief executive officer of Security Pacific Bank N.A., the Phoenix, Ariz., credit card bank of Los Angeles-based Security Pacific Corp.

At a later, unannounced date the discounts will be extended to customers in Oregon and Nevada, he said.

Prior to the ruling, only California customers of Security Pacific Bank were given the discounts through a special arrangement with the Arizona credit card bank.

The Federal Reserve's Nov. 7 decision eliminated a restriction that prevented bank holding companies from offering reduced rates on credit card annual fees or interest rates to customers with banking accounts at banking subsidiaries.

That opens a powerful marketing tool to banks with credit card operations like Security Pacific's.

"We are delighted that they clarified the rating," Capps said. "We want to do everything we can to tie credit card customers and retail business together. That gives us an advantage over AT&T, Citicorp and everything else you get through the mail."

The discounts will be similar to those currently offered in California, he said. Security Pacific's California credit card customers are offered a three-tiered rate schedule, Capps said.

Customers with two accounts at the bank - including home equity and auto loans, checking accounts and certificates of deposit - pay an annual rate of 17.8 percent, while customers with four accounts pay 14.8 percent. By comparison, customers with no accounts pay 19.8 percent.

About 60 percent of Security Pacific's more than 1 million credit card holders in California take advantage of the discount policy, Capps said.

First Interstate Bancorp, the other Los Angeles County bank holding company with an interstate banking system, currently provides no discounts on its credit cards for account-holders. A spokeswoman for the bank declined to comment on whether the ruling would affect the bank's marketing efforts.

The Federal Reserve had prohibited the discounts because it feared banks would pressure customers into accepting services like loans in order to obtain a reduced-rate credit card.