Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, March 3, 1992                   TAG: 9203030079
SECTION: BUSINESS                    PAGE: A-3   EDITION: METRO 
SOURCE: Associated Press
DATELINE: LITTLE ROCK, ARK.                                LENGTH: Medium

CHEAP CREDIT CARDS KEEP LITTLE BANKS BUSTLING

The banks, whose credit card rates are among the lowest in the nation, are getting thousands of calls daily and a flood of mail from people trying to cut their credit card rates.

"We could put in probably 100 extra phones and every one would be constant, the number of calls we get in," said John Ramer, vice president of Simmons First National Bank of Pine Bluff.

Simmons charges 8.5 percent interest on its credit cards. So does Arkansas Federal Savings Bank in Little Rock. Nationally, the average credit card rate is 18.8 percent, according to Bankcard Holders of America, a Northern Virginia consumer credit protection group.

The low rates can be explained by Arkansas law, which prohibits lenders based in the state from charging more than 5 percent above the federal discount rate, which was 3.5 percent on Feb. 28.

Simmons and Arkansas Federal are small, so they're grappling to handle the deluge of credit card applicants.

Arkansas Federal is drawing up to 5,000 requests per day for credit card applications, said Clinton White, a company vice president and credit manager.

The bank has extended work hours into the evening and shuffled some job responsibilities to handle all the applications, he said.

Simmons has added 10 employees solely to answer the phones, Ramer said, and "we get bushels of mail every day" from people requesting credit card applications.

Because Simmons' first responsibility is to serve Pine Bluff and Arkansas, he said, the bank eventually might have to stop issuing credit cards to non-Arkansans.

A credit card monitor, Ram Research Corp. of Frederick, Md., in its newsletter said Simmons Bank had raised its annual fee for out-of-state cardholders from $25 to $35. Ram said 85 percent to 90 percent of out-of-state applicants are rejected by the Arkansas banks and credit lines rarely are granted for more than $1,000. Arkansas Federal gives its cardholders no grace period, Ram said.

The executives said inquiries started pouring in after President Bush in November asked banks to reduce credit card interest rates. Simmons, Arkansas Federal and other small banks around the country with low rates began popping up in national news reports.

The small Bank of Montana in Great Falls offers Visa and Mastercard credit cards with an interest rate of 12\ percent.

A year ago, the Bank of Montana had about 9,000 Visas and Mastercards in circulation, president Tom Eisenhauser said. By late February, the number had jumped to 20,000 cards, he said in a telephone interview.

"We're all working nights and our staff is a third larger," Eisenhauser said.

Eisenhauser thinks the big banks eventually will lower their rates to stay competitive. "They have to. They're losing a lot of customers to banks like us."