Card Issuers

Theodore Casser has been a loyal Bank of America credit card customer for about 10 years. But the prospect that the bank might start charging him an annual fee because he pays off his balance monthly has the Baltimore software developer ready to sever that relationship. "I take it almost as an insult," says Casser, who hasn't heard yet if he will be among the small percentage of unprofitable Bank of America customers to be charged a $29 to $99 fee starting next year. "I'm happy to take the hit to my credit rating to cancel the card."

The Federal Reserve Board was poised today to pass unprecedented credit-card reform, which ultimately could reduce the amount that consumers pay in fees and interest. The Fed proposed regulations in May and has received more than 62,000 public comments since then. The revised regulations will be released later today, when the Fed takes them up for a vote, although they are expected to be similar to what was proposed earlier. If the Fed moves ahead with the proposal, changes expected for the credit-card industry include: * Card issuers won't be able to raise rates on outstanding balances unless it is a variable-rate card, a promotional rate is lost or expired, or a payment is more than 30 days late.

WALNUT CREEK, Calif. -- In a country where there are hundreds of credit cards to choose from, picking one that best suits your financial needs and lifestyle is no easy task. There are cards that offer rewards, cards that tout low interest rates and cards that have no annual fees. January is a busy month when it comes to applications sent out by credit card issuers. That's not surprising, given that many people who used their credit cards heavily in December for holiday shopping may be in the market for a new one. "We've heard that from card issuers, and we've seen that in our business," said Bill Hardekopf, chief executive officer of lowcards.

Many consumers will resolve to pay off their credit cards for the new year, and their intentions are in the right place. But according to a recent study, how they go about it is likely to be wrong. Mathematically, consumers are best off eliminating the debt on the card with the highest interest rate first. But researchers found that many of us tend to pay off the card with the smallest balance first, even if it carries the lowest interest rate. By not tackling the most expensive debt first, we end up paying more in the long run. So why do we do it?

In boasting a few days ago about Citigroup's $19 billion operating profit for January and February, CEO Vikram Pandit rattled off some of the cash cows, including "credit to consumer and corporate customers." That means you, credit card users. The good news is that Citi and other banks plastered by bad mortgage loans are partly rebuilding their capital with huge spreads between what they pay to get money and what they charge to lend it. The bad news: That means continued high interest rates on credit cards - despite the government's bringing short-term rates to historically low levels and despite the billions in taxpayer bailouts that Citi and some other card banks are getting.

Gamers: how do you feel about Sony's offer of free stuff after hackers accessed the PlayStation network , compromising information including credit card numbers and birthdates? According to Reuters, "Sony said on Sunday it would offer some free content, including 30 days of free membership to a premium service to existing users and in some regions pay credit card-renewal fees. Compensation would only be paid if users suffered damage, it added, without providing details. " One user in the story mentioned never trusting the network with his information again --- only using prepaid cards to access the system in the future.

The average interest rate on a U.S. credit card still hovers in the stratosphere at 18.42 percent. But the head of a Maryland company that tracks credit cards says the heat is on the big Visa and MasterCard issuers to lower their interest rates."

Credit card offers to small businesses are up this year, but some consumer advocates worry they may be falling into the wrong hands. They fear banks are pitching business cards to ordinary consumers — not just to corporate professionals — to circumvent new credit card reforms that restrict fees and interest rate hikes. The new federal Credit Card Accountability, Responsibility and Disclosure Act applies only to personal cards, not to plastic issued for business purposes.

THE COLLEGE Board put it best: "Imagine being 30 years old and still paying off a slice of pizza you bought when you were in college." That's the kind of credit card trouble many young adults get into before learning how to manage debt, a skill increasingly necessary by college age. It doesn't help that card issuers are eager to sign up low-income students for the chance to build brand loyalty. The latest studies by the loan provider Nellie Mae show that by sophomore year, 92 percent of college students have a credit card; by graduation, their combined plastic debt plus school loans averages $20,400.

The world of plastic is undergoing some changes in 1991. Current trends involving credit cards include:* A move to expand your use of cards to include taxis, movie theaters, fast-food restaurants, pizza delivery, supermarkets and health-care providers. The list keeps growing so long as you're willing to pay.* Dogged determination by banks, pressured by highly publicized economic woes, to keep credit card rates high. They feel they need the money more than you do and that you don't really care how much you pay anyway.