The end of the mortgage refinancing boom, a casualty of the sharp rise in interest rates, is shaping up as good news for the credit card industry.

Credit card receivables growth tumbled from the decade's peak of nearly 25% in 1995 as consumers turned to home equity for their borrowing needs. That tide is expected to turn and may already be doing so to some degree. "The higher interest rate environment should result in less credit card runoff from mortgage-related debt consolidation relative to a year ago," Jeffrey K. Evanson, analyst at U.S. Bancorp Piper Jaffray in Minneapolis, said in a report. In addition, "attractive teaser rates offered to both new and existing accounts during the December quarter should entice customers to hold balances on their cards."

At the same time, growth in receivables has slowed, overall credit card usage is increasing, a trend that should continue, analysts said.

"As a payment vehicle, credit cards will continue to take share away from cash and checks," said David Fanger, vice president and senior credit officer at Moody's Investors Service. Mr. Fanger spoke to a group of investors last week.

Growth in dollar volume of charges was almost 15% for the first three quarters of 1999, up from about 12% for 1998, according to Moody's. The growth rate is still lower than it was in the mid-90s, when it hovered around 20%. But industry experts expect it to increase further as more consumers shop on-line and use their credit cards as convenience tools.

Still, analysts say it is doubtful that the downturn in refinancing and the increase in volume will be enough to return credit card growth rates to their once-stellar levels.

"As a lending vehicle, the credit card is a fairly mature product at this point," Mr. Fanger said. "Cards have had a great 30-year run in the U.S., but at this point, companies need to adjust to the fact that this is not going to be a growth product."

Mr. Evanson's outlook echoes that view, calling for industrywide receivables growth of seven percent this year. Growth in 1999 was less than five percent.

With the exception of the subprime market, most consumers in the U.S. who want to revolve a balance on a credit card do so already, Mr. Fanger said. In addition, the aging "baby boom" generation is going to reduce the demand for credit overall as it approaches retirement age and its borrowing needs diminish.

MasterCard International reported that in 1998, about 54% of its accounts retained balances, down from 57% in 1997.

Many analysts are warning banks that they can no longer count on credit cards to fuel earnings growth.

"Looking longer term, we think the result of the slowing in receivables is going to be slow earnings growth for many issuers," Mr. Fanger said. "Pushing too hard for growth by some issuers will pressure margins and might lead to credit-quality problems."

Financial institutions such as Bank One Corp., which relied on credit cards to drive growth, will have to find other alternatives, Mr. Fanger said. Monolines - once valued for their focus on one product - have already started to diversify their product bases, branching out into insurance, money markets, and other traditional banking products.

Jerry Craft, president of InfiCorp, a consulting firm in Atlanta, said the credit card alone is no longer enough to drive earnings growth for most issuers, but it will play another important role in the future.

"The card is increasingly being looked at as an avenue for the cross-selling and delivery of financial services through electronic means," Mr. Craft said. "Credit card products are in many ways replacing the check product as the cornerstone of a financial relationship."

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