Optima Card Lowers Rate for Best Customers : Credit: The move is part of an effort to overhaul the troubled operation that saw delinquencies soar in ’91. It may prompt rivals to bring some card rates down.

In a move that puts pressure on other card issuers to lower some rates, American Express Co. said Wednesday that it is lowering interest charges for its best Optima card customers while increasing efforts to reduce bad debts in the troubled division.

When the changes become effective June 1, Optima will be the first credit card to establish rates tiered according to a customer’s credit risk.

American Express said Optima’s best customers will pay a 12.5% rate, while customers with poor records will pay 18.75%. Optima said the majority of cardholders will qualify for the lowest rate or a middle-tier rate of 14.75%. All Optima customers now pay 16.75%.

Robert McKinley, a credit card industry analyst with Frederick, Md.-based Ram Research, said Optima’s move will “add to the pressure to lower rates” that has been building since an aborted congressional attempt to set a cap on card rates last year.

Reaction among competing card issuers is not likely to be immediate, McKinley said, because the Optima card, with 3.2 million holders, is not as widely used as the Visa or Mastercard. In addition, Optima plans to slow its growth to 200,000 to 300,000 new customers a year while it gets its business back under control.

Nonetheless, there are indications that card issuers may be moving toward tiered rates based on credit-worthiness. Citibank is experimenting with a card that carries an initial 15.9% rate that shoots up to 19.9% if the cardholder falls more than 60 days behind on payments. The rate falls back down after the cardholder’s payment record improves.

American Express’ announcement is part of the company’s effort to overhaul the troubled Optima card business that saw delinquencies soar in 1991, forcing American Express to set aside $432 million for possible credit losses. Optima’s troubles led to a 59% drop in earnings at American Express’ card division last year.

Industry analysts said the changes should help resolve the problem with credit losses at Optima while nudging competitors to offer cardholders tiered rates. “This is very positive,” said Charles M. Vincent, an analyst with Provident National Bank in Philadelphia.