Citicorp is rewarding its good customers by reducing their credit card interest rates.

This month, the largest card issuer began notifying some of its gold and classic card customers that their interest rates had been cut in recognition of their value to the bank.

The customer-retention strategy for the Citibank card is uncommon. "Not that many issuers have the capability to manage their portfolios on an account-by-account basis," said Donald M. Berman, president of Cardholder Management Services in Plainview, N.Y. Among the exceptions are First USA Inc., Advanta Corp., and Capital One Financial Corp., which are treating their good customers similarly, Mr. Berman said.

The selected Citibank gold cardholders now pay 13.65%, two points less than their previous interest rate and Citibank's lowest pricing aside from temporary promotional offers. Pricing is based on the prime rate.

Classic cardholders who had been charged 17.65% now pay less, based on the balances they maintain. For example, the selected cardholders with balances less than $2,500 are charged 15.65%, and those who revolve more than $2,500 pay 13.65%. Classic customers may see their rates change monthly.

The average standard card interest rate is 17.55%, and the average gold card interest rate is 16.84%, according to RAM Research Group in Frederick, Md. Robert B. McKinley, president of the firm, said Citibank's 13.65% rate is "competing with the low-price leaders."

Only the most creditworthy customers qualify for the rate changes, said Citibank spokeswoman Maria Mendler. They are customers of at least one year who have not been late with a payment in six months or more and who have a history of properly managing their credit line.

"We are looking at ways to encourage our customers to use their cards," said Ms. Mendler.

Citibank AAdvantage and Ford card customers are not eligible for the lower rates.


Bank of America is offering a $25 reward to new customers who transfer a balance greater than $1,000.

The offer by the flagship subsidiary of BankAmerica Corp. has no annual fee and an introductory rate of 9.9% good through May.

According to BAI Mail Monitor in Tarrytown, N.Y., only 1% of offers give cardholders a cash reward for transferring a balance. Some base the reward on a percentage of the transferred balance; others give a flat reward, as Bank of America does.

Mr. Berman of Cardholder Management Services said such offers are particularly risky because issuers are giving money to people they cannot be sure will keep the card for long.

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