Shaken by the recent outcry over high credit-card interest rates, some banks and retailers are beginning to push the rates down.
"There have been serious discussions going on at the major issuers on how to respond," said Robert McKinley, publisher of Bankcard Update in Frederick, Md., which tracks the industry. "We may be headed for a rate war."
Yesterday, Charles Ford Co. Inc., parent of Ford's and Rileys, the California regional department store chains, announced that it had reduced the annual interest rate on its charge accounts by 5 percentage points -- to 14.8 percent from 19.8 percent.
The decision "reflects both the dramatic decline in overall interest rates and an acknowledgment of the difficult times consumers face in today's sluggish economy," Ford President James Vicars said.
Another credit-card issuer, AT&T Corp., pushed the rate charged most holders of its highly popular Universal Card down to 17.4 percent from 18.4 percent, effective Nov. 18.
Bankcard Update found that the average credit-card rate -- based on an annual sampling of the top 107 issuers -- stood at 18.24 percent in November, down from 18.57 percent in November 1990 and the lowest since November 1987, when the figure was 18.14 percent.
Mr. McKinley said that his research showed that so-called lower-rate cards -- those bearing interest rates below 15 percent -- are becoming almost abundant.
He said that last month he found 166 cards -- out of 466 surveyed -- with annual interest rates below 15 percent. That was up sharply from 105 cards in January and is the highest number of low-rate cards in the six years he's been keeping score.
Mr. McKinley added that an informal survey of the top issuers late last month disclosed that 44 of the 157 polled -- 28 percent -- said they had held special planning meetings to discuss the brouhaha over credit-card rates, and more than half of those 44 planned to reduce their rates.
The planning sessions came within days of President Bush's Nov. 13 call for lower credit-card rates to help jump-start the economy.