CHICAGO -- As consumers switched credit cards last year in search of lower interest rates, they racked up debt at a faster pace than in 1992 through both purchases and cash advances. an American Bankers Association survey has found.

Preliminary data from the study of 140 banks indicated that total outstanding balances on MasterCard and Visa cards rose 14%, to $197.5 billion, in 1993.

A 42.6% jump in cash advances, to $55.4 billion, and an 18.5% rise in purchases, to $310.7 billion, fueled the growth in outstandings, the association's 1994 Bank Card Industry Report showed.

The study's preliminary results were released during the National Bank Card Conference here.

Bank card outstanding balances grew only 3.71% in 1992, to $172.7 billion.

"In 1993, we saw very strong growth, which reflected the underlying consumer confidence that we all believed was there," said Keith D. Coughey, group vice president of consumer lending for PNC National Bank. Wilmington, Del., and vice chairman of the ABA Bank Card Executive Committee.

Part of the reason for the jump in cash advances was the continuing tendency of consumers to transfer balances from one account to another in search of lower interest rates and annual fees, noted Cynthia A. Graham, president of Barnett Card Services, Jacksonville, Fla.

The increase in cash advances, she pointed out, also reflected the promotional rates companies have been offering to try to capture more balances.

"We refer to it as 'rent a balance'," said Ms. Graham, who is chairman of the ABA card executive committee and master of ceremonies at the annual conference it sponsored this week in Chicago.

Overall, such balance piracy meant good news for the industry, but for issuing banks "it's both an opportunity and a threat," said Eileen M. Friars, president of NationsBank Card Services, Charlotte, N.C.

The ABA survey revealed that the number of card accounts with balances had jumped 18%, to 130.4 million, reversing 1992's 6.9% decline, to 110.4 million.

As revolving debt grew, however, consumers tried to adjust their monthly payments upward.

The survey found that 1993 dollar volume of card payments grew 16.2%, to $327 billion, up from a 12.6% growth rate in 1992, to $281 billion.

"Consumers did a lot of balance sheet cleanup during this last recession," Ms. Graham said, "so they're in preUy good position for taking on additional debt."

"Fundamental credit quality is there," said PNC National's Mr. Coughey, "which I think helps to show that issuers truly are interested in both sides of the equation. We are not looking to profit from consumers' woes."

For the second consecutive year, banks' asset quality improved, as delinquency rates dipped 15% to 16% in a number of categories.

Credit chargeoffs dropped 4% due to improved economic conditions and banks' risk management, the ABA report indicated.

Dollar losses due to fraud rose 4.7%, to $598.4 million, a smaller rise than in previous years.

The industry weathereck a 39% jump in 1991, for example, and 14% in 1992.

Total bank revenue from interest charged remained nearly flat for a second straight year -'with a 3% increase, to $25.9 billion.

The MasterCard and Visa trend data are part of the total industry survey, done with help from KPMG Peat Marwick, which will be released in October.

Card executives were pleased at the bank card statistics.

"I think consumers have found a lot of convenience in credit cards, and much better rates;' Mr. Coughey said. "I think each year has been a record in terms of outstandings and volume, but still, far more transactions are taking place with cash and check. We probably only have about 15% of the payment systems volume."

"It's all good news," said Ms. Friars. "This year has been very good, too. The growth has continued."

If there is a downside, said Ms. Graham of Barnett, it's riding the crest of trends. "There are an awful lot of things going on in the marketplace," she said. "You never know which ones are going to bite you.

"With as much price competition as there is now, I think there's always the concern consumers will become so used to these promotional rates that they will become unhappy" when rates go up.

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