Informed choice on credit cards

AN envelope arrives in the mail: Your credit rating is so good that the First National Bank of South Overshoe is offering you a MasterCard with a sky-high credit limit. No annual fee for the first year. And bonus points, good for merchandise, accumulate each time you use the card. But search that notice for the interest rate you'll be charged, and all too often it won't be there. Yet that information is arguably more vital to a family budget than bonus points and a year's breather on fees.

Credit cards are not licenses to splurge. But many people do face unexpected expenses that force them to make minimum payments for a time. The monthly interest levied may look puny next to the outstanding balance; but it can account for a hefty chunk of the minimum payment, stretching the time it takes to trim the balance.

In the interest of informed choice - and more competitive interest rates - House-Senate conferees are working on a compromise bill that would require prominent display of interest rates and other fees in all credit card solicitations. It deserves passage.

When interest rates started to fall earlier this decade, people expected competition among card issuers to bring down credit-card interest rates, too. That happened to some extent. But the 10 largest issuers of Visas and MasterCards still charge rates between 17.5 and 20 percent. In the meantime, these megabanks' share of the credit-card business has grown from about one-third to one-half of the market. Not much price competition there. With low inflation during the last few years, the ``real'' cost of using those cards (the difference between the listed interest rate and inflation) has grown. That's money in the bank - for the banks.

One can always return a card after looking at the rates on the agreement that comes with the plastic. But listing those rates on solicitations gives consumers a chance to compare rates before accepting a card. Disclosure up front could also allow consumers to shift their card accounts to a bank with lower rates. The opportunity to choose wisely becomes even more important now: Interest rates are rising and by 1991 taxpayers will no longer be able to deduct interest on consumer loans and credit cards from federal income taxes.

To their credit, more banks are including interest rates on solicitations, in anticipation that Congress will pass a disclosure bill. But the legislation is still useful. Call it, if you will, a little extra incentive for banks to do what they should have been doing all along.