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

DATE: FRIDAY, October 27, 1995                   TAG: 9510270131
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: MAG POFF STAFF WRITER
DATELINE:                                 LENGTH: Medium

BANKS SAY THEY WON'T RAISE RATES

Most banks, however, are imposing fees - typically $15 - when card holders exceed their credit limit or are late in making payments.

On Thursday, Bankcard Holders of America, a McLean financial services organization, warned that customers should pay down their debts before rate increases go into effect. The group, which has an order fulfillment service office in Salem, said some banks are doubling interest rates on credit cards.

Ruth Susswein, Bankcard Holders executive director, said at least one bank is boosting rates if a consumer charges "too much," while other banks are terminating card holders or increasing rates if they have charged too little.

NBC Bank, which operates branches inside Kroger supermarkets in the Roanoke and New River valleys, does impose a penalty rate for customers who make payments significantly late.

Annette Jones, who is in charge of credit cards for the bank, said NBC will raise the rate by 3 percentage points for any person who is more than 30 days late in making payments twice in one year. That means the payment is received more than 60 days after billing, which is 30 days beyond the payment deadline.

The regular rate on a typical NBC card is the prime rate plus 6.5 percent, so the rate will rise to prime plus 9.5 percent for anyone who is that late twice in a year. The current prevailing prime rate is 8.75 percent.

NBC's rate returns to normal, Jones said, when the bank receives the customer's payment on time for six consecutive billing cycles.

NBC Bank, like most other institutions, charges $15 to those who significantly exceed their credit limits.

Cheryl Jenkins, spokeswoman for Crestar Bank, said there is a money fee for late payments, but the bank is not contemplating any changes in interest rates.

Fred Winkler, vice president in charge of card products for First Union Corp., said his bank never charged teaser rates, so rates are not going up. He said many banks last year offered special low rates for the first year after a customer accepts their cards, such as 5.9 percent, and these are rising to 14 percent or 16 percent. But, he said, the permanent rates was made clear all along.

"Absolutely not," said Ellis Gutshall, chief lending officer for Valley Bank. He said the bank had not even considered raising interest rates or imposing penalty rates.

The same is true at Central Fidelity Bank, according to spokeswoman Susan Mistr.

First Virginia Bank, NationsBank and Signet Bank did not comment Thursday on the warnings by Bankcard Holders of America.

The organization also offered five suggestions for handing credit card balances in light of national reports that consumers are piling up higher debt:

Pay off as much of your credit card balances as possible before the holiday shopping season begins.

Replace credit with debit. Debit cards offer the convenience of credit with the discipline that checking accounts can offer.

Put the most money toward the highest rate card, not the one with the biggest balance.

Avoid hefty penalty fees and rates: Never pay late or go over your credit limit.

Don't use all your available credit just because it's there. While it may be available, it's probably not affordable.