Community banks have lower credit card chargeoff rates than big banks, according to the Independent Bankers Association of America.

At its annual bank card conference last week in Newport Beach, Calif., the IBAA said chargeoff rates among the 2,027 community banks in its card program were 2.2% at yearend 1996. That was less than half the industrywide average, which the IBAA placed at 4.84%

Only 3.69% of credit card accounts at participating IBAA Bancard banks were 60 days past due, compared with the industrywide average of 4.83%.

Speakers said community banks's personal touch makes customers feel more obligated to repay their debts.

"In the '90s people are paying more attention to the quality of their lives," said Charlotte Rush, senior vice president, global communications, for MasterCard International. "A community bank's knowledge and relationship with customers is an advantage over larger banks.

"The future is as bright for community banks as it is for anybody."

Where community banks are at a disadvantage, several speakers said, is in experimenting with smart cards. Community bankers would be wise to follow developments in the area, speakers said, but ought to leave pilot testing to the larger institutions.

"Smart card technology is expensive, and we are trying to drive down the cost," said Carol Cosby, an Atlanta-based senior vice president at Visa U.S.A.

Until the technology is widely accepted, Ms. Cosby said, "Let the big guys undertake the cost and do the learning for you."

Finding strategies to compete with larger bank card issuers was a prevailing theme of the conference.

With large banks issuing more and more cobranded credit cards, small banks are looking for ways to offer rewards programs of their own.

Some vendors at the conference showed off products meant to help community banks tailor their own versions of a rewards card.

Equifax Card Services, for instance, unveiled a new product called Scorecard, which offers cardholders points for each dollar of purchase made with the card. The points are redeemable for travel and gift rewards.

Equifax, of Tampa, also showed community bankers how they could offer cards that paid cash back rewards, either incrementally or once a year in a lump sum.

Doling out small checks as rewards for credit card purchases is a good strategy, said Ty Taylor, an Equifax vice president. Since consumers are less likely to cash small rebate checks, he said, banks can save money.

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