Trickle-Down Theory Isn't True With All Interest Rates.

WITH general interest rates coming down, when can you expect rates on your own loans to drop?

Variable-rate loans will drop on a schedule written into your lending agreement (which you may not have read). Loans with fixed rates normally don't change, but might in some cases. Here's what to expect:

* On credit cards: Nearly half of all cards currently carry variable rates, said Robert McKinley, president of CardWeb.com, which keeps track of the industry. They're often tied to the bank prime lending rate, which dropped again last week - the third decline this year.

The prime rate currently stands at 7.5 percent. Variable-rate cards are charging an average of 14.66 percent on unpaid balances, McKinley said.

The majority of banks adjust their card rates monthly, so many customers will already have seen a cut.

The remaining banks generally adjust quarterly, and April starts a new quarter. This month, virtually all consumers with variable-rate cards should be on track to lower rates. Watch for it in your next billing cycle.

So-called "fixed-rate" cards are another story. When you sign up, you probably assume that "fixed" carries its normal English meaning - that is, a rate that won't change. Poor you. The meaning is far more slippery than that.

Credit card come-ons

As an example, take a recent offer from Fleet Bank for a card with a "revolutionary low, fixed rate" of just 7.99 percent. The mailing said that this wasn't a mere "introductory rate" that would rise after "only a few short months," but a real, fixed rate.

The reader who showed me this mailing signed up for the card. Six months later, her "fixed" rate rose by about 2.5 percentage points.

And yes, that's legal. Fleet spokeswoman Deborah Pulver said it's "well recognized" that credit-card terms can be "modified," at the will of the bank.

Oh? Well recognized by whom?

You should probably expect any super-low "fixed" rate to be "modified" upward. The fine print in credit-card agreements gives the bank the right to change the rate at will, as long as you're notified at least 15 days in advance.

For top credit risks, fixed rates today range from around 9.9 percent to 12.99 percent. The average fixed rate: 16.04 percent. If interest rates keep on going down, some fixed-rate cards might be forced to cut rates to keep people from switching to something better.

If your card issuer is offering lower rates to new customers, call and ask for that rate yourself That usually works for people in good credit standing. "Banks offer lots of rates," McKinley said. "They'll offer a lower rate to retain you."

* On mortgages: Payments on a one-year adjustable-rate mortgage change on the loan's anniversary date. Your specific rate might be tied to Treasury rates or to the cost of funds at lending institutions.

Mortgage rates have been declining since last summer. On average, new one-year adjustables are running at 6.32 percent, according to HSH Associates.

Adjustable mortgages have been a pretty good choice in recent years. Rates rose in 1999 and early 2000. But over that period, you still paid less than you would have with a fixed-rate loan. What's more, when market rates decline your mortgage rate also declines, at no extra cost to you.

Not for everyone

Borrowers who chose fixed rates, however, are hustling to refinance. You'll have to pay closing costs again, so make sure that your savings in monthly payments are worth the expense.

A 30-year fixed-rate loan is averaging 7.36 percent. A 15-year loan runs around 6.87 percent. When fixed- and adjustable-rate mortgages cost about the same, the fixed-rate loans are generally more appealing.

By the way, not everyone should refinance. Refinancing starts the clock ticking on your loan again, if you've paid for 10 years and decide to take a new 30-year loan, you'll pay more in interest over the long run, even though your monthly payments drop.

Ideally, you should refinance over a shorter term or for the same number of years remaining on your current mortgage.

* On home equity credit lines: Most of these loans are tied to the bank prime rate. Right now, they're averaging 9.13 percent - more than a point and a half over prime. Rates are reviewed each month. When they change, you usually see the result in the next billing cycle.

* On auto loans: Don't even consider refinancing. Loans are the cheapest on brand-new cars. If you refinance, you'll get the higher used-car rate.

Tax Breaks Accrue in College Savings Plans

One of the best ways to save for college is through what's known as a 529 plan. They're run by the states and soon, all 50 will be offering them.

You get splendid tax breaks from 529s. But some parents and grandparents worry that using these plans will reduce their eligibility for student aid.

It might - but then again, it might not. You don't know in advance what your particular situation will be. Here are some facts that can help you decide.

The 529 plans come in two forms:

* Prepaid tuition plans - the conservative choice. These plans guarantee that the money you save today will match the growth in tuition inflation at state-run colleges. Currently, that gives you an average 4.4 percent return. In most cases, you can also use the money out-of-state.

Prepaid plans appeal especially to people with modest incomes who are aiming for a or university.

* College-savings plans - the more aggressive choice. You contribute to a pool of money that's managed by the state treasurer or an outside investment adviser. A typical savings plan leans toward stocks when the child is young, then moves toward bonds and cash as college draws near. A few plans offer all-stock or all-bond accounts.

You can use the money at any accredited school, for tuition, room, board, books and supplies. If your state's plan is inferior or doesn't disclose performance and fees, you can invest in another state.