Magazine article American Banker

Wachovia Cuts Rate on Cards to 8.9%

Magazine article American Banker

Wachovia Cuts Rate on Cards to 8.9%

Article excerpt

Wachovia Corp. has cut the interest rate on some credit cards to 8.9% - the lowest offered by a national card issuer.

Wednesday's half-point reduction stemmed directly from the cut in its prime lending rate two weeks ago. Wachovia prices its "Prime Plus" Visa and MasterCard at 2.9 percentage points over the prime and adjusts the rate on the 15th of each month.

The North Carolina-based company introduced its Prime Plus card early last year, when rumblings of a rate war first rippled through the industry.

Rate Cutting Widens

While other issuers had long offered cards to local consumers at bargain-basement prices, Wachovia was one of the first to make cheaper cards available nationwide.

Its latest move came amid widespread rate cutting. Also on Wednesday, for instance, Mellon Bank Corp. in Pittsburgh introduced a variable-rate card with a 13.9% rate and a $35 annual fee. The banking company, which has $1 billion in card loans, will set the card's rate at the prime plus 6.9 points but no lower than 13.9%.

Mellon also offers a fixed-rate card, whose holders pay 18.6%, plus an $18 annual fee.

Also this month, Minneapolis-based Norwest Corp. - which links its card rates to the prime and adjusts them quarterly - reduced its rate on regular MasterCard and Visa cards by a half point, to 15%.

Stagnant Rates Criticized

Valley National Bank, Phoenix, and Huntington Banks of Michigan also announced reduced rates in recent days.

The industry came under fire last year because credit card rates were not falling despite large reductions in overall rates. …

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