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

DATE: MONDAY, November 14, 1994                   TAG: 9412070023
SECTION: BUSINESS                    PAGE: EX6   EDITION: METRO 
SOURCE: MAG POFF STAFF WRITER
DATELINE:                                 LENGTH: Medium

CREDIT CARDS: HERE'S A LOOK AT WHO'S OFFERING WHAT

The prime, which is the rate banks charge their most creditworthy commercial customers, has risen 1.75 percentage points in less than a year. Since February, the prime has jumped from 6 percent to 7.75 percent, and many in the banking industry expect still another increase, possibly a quarter-point, by the end of the year.

Even though changes in the prime rate have impacts on consumer rates, shoppers can find fixed rates on credit cards as low as 11.9 percent at Salem Bank and Trust and 12.9 percent at Crestar Bank. Keep in mind, however, that these rates can go up if the interest market keeps inching upward.

Some banks over the past several months have offered very low introductory rates for new accounts. Summer and early fall are when credit-card lenders try to sign up new customers, knowing that consumers post about 40 percent of their total credit purchases just before end-of-the-year holidays.

The 8.9 percent being promoted by Signet Bank, however, will continue throughout next year. At Central Fidelity Bank, charges made through March 31 will continue at the 9.9 percent rate indefinitely, although purchases made after that date will be charged at 15.6 percent.

Among cards tied to prime, you can find a surcharge ranging from 2.9 percentage points at First Union and Crestar banks or as high as 9.9 percentage points at NationsBank.

Whether the rate is important depends on an individual's payment habits. People who carry balances in their accounts should seek out a low rate. Those who pay off their accounts every month are wiser to look instead for a card with no annual fee.

It doesn't pay to slip over the credit limit or to make a late payment. Bank charges are steep, typically $15, for such infractions.

Gold cards usually have lower fees and interest rates, but customers generally must qualify for credit lines of $5,000 or more to obtain them.

An applicant for a bank card generally must have a good credit history and household income of at least $15,000 in order to be issued a credit card. Banks look at customers' assets as well, but these must be in liquid investments such as cash or stocks or mutual funds, not in real estate and the like.

Signet Bank offers a secured card aimed at helping people rebuild damaged financial reputations. The secured card program also can help young people whose lack of credit history prevents them from qualifying for standard charge cards.

Under the secured-card plan, the credit card is tied to a savings account. The amount on deposit in savings equals the extent of the credit line. Money in the savings account may not be withdrawn until the card balance is paid off; meanwhile, the money in the account earns interest.

Merchants, motel clerks, auto rental agencies and others who see the cards cannot tell they are secured. In the marketplace, they function just like a standard card.

Fees, however, are higher than for conventional credit cards because the bank takes a bigger risk.

Signet offers a variable secured card tied to the so-called Libor index, the London Interbank Offering Rate. The interest now stands at 19.8 percent, compared with a variable 15.40 percent for existing accounts, or prime plus 7.65 percentage points.

But the point of a secured card is to prove you can - and will - pay off the balance promptly. Signet reports to the credit bureau as if the secured card were a regular card, so it offers an opportunity to rebuild damaged credit quickly.