Marine Midland Bank has joined the growing roster of banks that offer attractive balance-transfer programs for credit cards.

The Buffalo-based bank offers a 9.25% interest rate on transferred balances until Dec. 31, 1995. A higher rate will be charged to new purchases and any portion of the transfer left after Jan. 1, 1996.

Marine, a unit of HSBC Holdings PLC, currently charges 19.8% for its fixed-rate cards and 10.99% and 11.99% as a variable rate on its gold and standard cards, respectively.

The bank is also waiving its customary 2% cash advance fee for transferred balances, so customers have until Nov. 30 to pay off existing credit debts with cash advance checks" and transfer them to Marine Midland.

Strong Response

The program was instituted about five weeks ago. Since then, according to bank spokesman Robert Becton, credit card applications have increased by 70%

Also, requests for credit line increases by new and existing customers have increased 130%.

Robert B. McKinley, president of RAM Research Corp. of Frederick, Md., said banks have been providing enticing credit card packages that often include short-term low interest rates for, trinsfers, no annual fees or rebates.

A recent RAM survey found that about 50% of credit card issuers had started some kind of balance-transfer program. Among other incentives, Mr. McKinley said, some midwestern issuers offered to cut up old cards for new customers.

Common Tactic

Many issuers, using the same tactics as Marine Midland, waive cash advance fees on balance transfers and provide substantial float time.

"It's the lemonade stand," said Mr. Becton of Marine Midland. "If the kid up the street can offer the same thing for 2 cents less, that's where people will go.

Smaller issuers have been forced to engage in balance piracy," said Mr. McKinley, to stem their outflows of credit balances and compete against larger, more established adversaries.

A Lot of Little Piranhas'

There is little else these banks can do in "a market that's been saturated for years," he said, but buy out competitors or lure away their customers.

"There's a lot of little piranhas out there," Mr. McKinley said. He cited First USA Bank of Wilmington, Del., and People's Bank of Bridgeport, Conn., as two that had benefited from balance transfers.

Fueled by a fixed-rate transfer offer, People's Bank boosted outstanding balances by 37% in a six-month period, while First USA has grown by 23% in the past year.

Giants Sluggish

But most of the bigger banks have been slow to respond to this trend, according to Mr. McKinley.

Although Citibank has slowly cut interest rates on its co-branded Ford Motor Co. Visa card, its promotions have not yet paid off as much as it those for Household Intemational's General Motors Mastercard.

Chase Manhattan Corp. has also started to lower its rates, but Mr. McKinley said it is about nine months behind the market.

Larger institutions with lots of securitized debt have less leeway to play with rates than do "lean and mean" adversaries like Wachovia Bank, he added.

"Any banks with low interest and balance transfers are deadly," McKinley said. "They're taking away the cream of the crop."

So what lies in store for banks with rates falling and competition on the rise?

Mr. McKinley said "rebate transfers" are possible - transfeff ing points from one card program to another - maybe six months to a year out.

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