Interest Rates on Credit Cards Are Lowest Ever

Rates on bank-issued credit cards have dropped to their lowest level ever, falling to an average rate of 17.54% from 18.43% nine months ago, the Nilson Report says. The Santa Monica-based industry newsletter expects the slide to continue, with average rates dipping below 17% within 12 months.

David Robertson, president of the Nilson Report, said banks will continue to reduce rates on their Mastercards and Visas to prevent defections to lower-rate cards offered by non-bank competitors such as American Telephone & Telegraph. AT&T; became the nation’s fourth-largest card issuer by offering consumers low rates and no annual fee, at first.

Robertson also expects the Federal Reserve to cut the discount rate in the next 12 months, a move that would put additional downward pressure on card rates.

The beneficiaries of the lower rates have generally been consumers who run up sizable balances and make monthly payments on time, the Fed reported earlier this week. The Fed said it expected the trend to continue, with more banks offering their best customers a choice between the traditional fixed rate or the variable rate pioneered by AT&T.;

Citibank and Chase Manhattan, two leading card issuers, have already lowered the rate they charge their best customers. Bank of America is expected to match its competitors’ moves soon. For the last three months, it has been testing a variable-rate card--one in which the rate fluctuates as overall rates rise and fall--in some California markets, Robertson said.

GREEN MARKETING: If a label says “ozone friendly,” does it mean that the product won’t damage the air? Not necessarily, say those who are critical of the government’s 5-week-old environmental marketing guidelines.

Under the Federal Trade Commission’s guidelines, a product that contributes to the formation of harmful ground-level ozone can call itself “ozone friendly” if it doesn’t damage the atmospheric ozone layer. That doesn’t sound like a friendly product to Mark Eisen, environmental marketing manager for Home Depot, the Atlanta-based do-it-yourself home repair chain. “The FTC is just wrong,” he said.

Home Depot has decided not to permit “ozone friendly” claims on products that create ground-level ozone, Eisen said. The move could result in some changes: Since the retailer started screening environmental claims a year ago, it has forced 100 manufacturers to change claims or product formulas.

AFFINITY SCAMS: The people who invested $12 million two years ago in a commodities firm called Sung Hing expected to profit. Instead, they lost their investment, becoming victims of one of the largest affinity scams yet uncovered in Los Angeles.

In affinity scams, members of an ethnic or religious group prey on other members; the Sung Hing scam involved members of the Chinese community. At a forum at UCLA last week, the federal Commodities Futures Trading Commission urged people to check whether a commodities firm is registered with the CFTC before investing, although that still is no guarantee that a firm is legitimate and operating legally.

Richard Symonds, CFTC counsel in Los Angeles, said the Sung Hing scam succeeded for a while because many Chinese are reluctant to check credentials when they invest.

The community, he said, “works on a friendship basis. They are embarrassed to ask for a license and other documents.”

While the Sung Hing scam involved investments in gold and foreign stocks, not all do. Symonds said some con artists set up phony companies, then fleece employees by telling them that their money is needed to keep the company going.

People who believe that they are victims of a scam, or who have questions about an investment company, can contact the CFTC at (310) 575-6783.

ODDS AND ENDS: We found these perplexing instructions on the safety card of a United Airlines 767: “If you are sitting in a exit row and you cannot read this card, or cannot see well enough to follow these instructions, please tell a crew member.”

. . . Even spokeswoman Rebecca Nelson of the U.S. Office of Consumer Affairs admits “it’s a little ironic.” A big sponsor of the agency’s upcoming “Operation Wise Buy” campaign is Sears, Roebuck & Co., the Chicago retailer that this week agreed to distribute up to $46.6 million to settle charges that it ripped off California automotive repair customers.

. . . More on the ups and downs of air travel: Traffic was up in July, to 38 million passengers, making it the biggest month in airline history. Not coincidentally, fares in July were down to their lowest level since 1980.

Credit Costs

Here’s what bank cardholders pay for revolving credit, according to a Nilson Report survey of the 100 top U.S. issuers.

Less Than 16%: 29%

17%-18%: 15%

16%-17%: 12%

18%-19%: 8%

More Than 19%: 36%