Consumer activists who have raised a ruckus over fair-lending issues are now zeroing in on credit cards.

Inner City Press/Community on the Move, for one, is accusing Associates First Capital Corp. of raising cardholders' interest rates to as high as 28% regardless of their credit history. Associates ranks 17th among issuers of MasterCard and Visa.

Other consumer groups are grappling with the issue, warning consumers of penalty rates for late payments that can jump as high as 32% when the national average is closer to 17%.

"Some credit card issuers keep pushing the envelope," said Stephen Brobeck, executive director of the Consumer Federation of America in Washington.

Inner City Press says the credit card market is due for an investigation because a lack of public documentation prevents consumers from learning the specifics of industry practices. This new attention may impede deals such as Banc One's planned acquisition of First USA Inc.

The New York-based group is asking the Office of the Comptroller of the Currency to veto recent acquisition applications filed by Associates, a Ford Motor Co. unit. Associates plans to buy J.C. Penney's bank card portfolio and the private-label accounts of Texaco Credit Card Services.

"If the previous owners found it profitable to lend to these people at 17%, why does Associates increase it to 26%?" asked Matthew Lee, Inner City Press' executive director.

The group has targeted Associates before, saying it had a poor record in subprime mortgages and home equity loans.

Mr. Lee cited a cardholder from Norwest Corp. who alleged Associates raised his annual rate from 17.25% to 26.9%, and another from Comerica Inc. who complained of an increase from 17.10% to 28.65%.

"It is not uncommon when portfolios are purchased to adjust rates," said Fred Stern, senior vice president of Dallas-based Associates. Mr. Stern said that in the case of the Comerica and Norwest accounts, some rates went up, but others went down.

"The interest rate on the Texaco card is currently 21%, and we plan to price it at a variable rate based on prime plus 13.99% (22.24%)," said Mr. Stern.

Interest rates for the J.C. Penney portfolio have not been set yet.

"If Associates ends up repricing a good portion of their portfolio, other issuers may feel that they have the luxury to do the same," said Ruth Susswein, executive director of Bankcard Holders of America in Salem, Va.

A spokesman for the OCC in Washington said the request for an investigation of Associates' practices had been received and would be considered.

Associates is also being condemned by consumer activists for penalty pricing. They cited rates that reach as high as 32.6% after two late payments.

"That's a usurious rate for most consumers," Mr. Brobeck said.

"We think our situation in relationship to credit cards is very fair," Associates' Mr. Stern said. Associates National Bank "has received satisfactory ratings for our CRA efforts and we are comfortable that we are meeting obligations of that law."

Mr. Stern added that critics are spotlighting products specifically marketed to those consumers in the subprime market, who qualify for secured cards, and applying it to all of Associates' card programs.

While Associates is receptive to the needs of its customers and the need to grant credit in a fair manner, Mr. Stern said, it is "also sensitive to the fact that there are risks involved and we have an obligation to protect ourselves against those risks."

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