The Federal Reserve's recent interest rate increase, an attempt to cool economic growth and head off inflation, may affect the credit card industry as consumers begin to feel the pinch of higher lending fees.

When the discount rate went up a full 50 basis points on Aug. 16, most banks responded by raising the prime rate from 7.25% to 7.75%, and that eventually will filter out to credit card rates.

"Not all cardholders are going to see an increase tomorrow," said Nancy Judy, a spokeswoman for the American Bankers Association. Most card issuers raise their variable rates at the end of the month or the first day of the quarter following a rate increase, she pointed out.

Although bankers aren't expressing major concerns for the short term, there is speculation that higher rates will spur price competition, perhaps escalating pricing battles and consumers' tendency to shop around for better card deals.

"There have been a lot of predictions that there will be another big switch in the industry because of the increase in prime," said Ms. Judy.

Since 1992, the rate-shopping trend has been steadily rising, along with growth in variable-rate cards, she said.

The industry has about a 50-50 ratio of variable- to fixed-rate cards, Ms. Judy said.

Anne Morgan Moore, president of Synergistics Research Corp. in Atlanta, said consumers are confused about what types of rates are available, and whether they are fixed or variable.

Based on Synergistics' research, Ms. Moore said 66% of consumers think their rates are fixed. But as rates rise, consumers who had switched to lower-rate cards are realizing the true meaning of variable.

"There's a possibility of backlash from consumers that find out they have a variable rate," she said.

Although some experts predict wholesale switching as the Christmas season nears, Cynthia Graham, president of Barnett Banks Inc.'s Barnett Card Services Corp. in Jacksonville, Fla., said consumers will see "the benefits and convenience of using credit cards is still to the customer's advantage."

Charge volume for the first half of 1994 is up 32%, while balances are up 6%, according to RAM Research Corp., a credit card tracking firm in Frederick, Md.

"For customers with fixed-rate cards - and the majority of our cards are fixed - there will be no impact," said Ms. Graham.

She also said that even if variable rates went up a full point, consumers would pay only an extra dollar a month for outstanding balances of $1,000.

"I don't call that a mega-issue," she said.

Still, Donald Ratajczak, director of the economic forecasting center at Georgia State University in Atlanta, said, "Every time you kick up rates, you're going to get some people responding."

He said some people will be more cautious about taking on debt; others will become more aggressive about finding better rates.

Mr. Ratajczack advises debtors to pay off their balances.

Consumers "are trying to move their money market accounts, looking for a couple of extra interest points, whereas if they pay their credit card debt, they save money in interest rates."

Experts say that many customers with credit card balances have enough in the bank to pay them down, but choose not to. The rate increases, along with all the media attention focused on them, may inspire repayments.

"I think some people will clearly tend to stop revolving for some portion of the year," said Ms. Graham.

"The consumers decide every month whether they'll pay the whole balance or part of it. That's one of the real benefits to credit cards - that the consumer decides ."

Ms. Graham said it is hard to predict what cardholders would do, but she added, "It's not just a rate decision." Annual fees, rebates, and value-added enhancements factor into the equation.

"There's really choice overload for consumers these days, which can be overwhelming," said Ms. Moore.

Thomas P. Facciola, equity analyst for Salomon Brothers in New York, said consumers are slow to react to the barrage of offers: "If consumers were very quick to shift credit card balances to low-rate issuers, the average industry rate would not be 16%, it would be much lower."

Illustrating his point, Mr. Facciola said Advanta Corp., First USA Inc., Bank of New York Co., and Signet Banking Corp., four of the lowest-rate issuers, have a combined Visa and MasterCard market share of only I3%.

He also said there would be little to no impact on consumer usage and payment behavior.

He characterized the market as competitive, but stable.

"I don't see this rampant war out there," he said. "It's easy to say it, but when you look at the numbers, it doesn't come up that way."

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