Providian Financial Corp. has fired a new salvo in the credit card industry's pricing war.

With an interest rate of 7.9%, Providian is undercutting the 9.9% offers from major issuers including Banc One Corp. and Capital One Financial Corp. Observers said bankers' copycat mentality may prompt others to follow suit.

Not only is Providian's Visa Platinum card a full 10 percentage points lower than many credit cards, but it also has a 0% introductory rate for the first three months.

"A year and a half ago 7.9% was an aggressive teaser rate," said Michael Auriemma, president of Auriemma Consulting Group, Westbury, N.Y. "Now it's the go-to rate."

So far, Providian's only rival at this price point appears to be Pulaski Bank and Trust Co. of Little Rock, which may want to revise the message on its toll-free number.

Pulaski claims to offer the "lowest non-teaser rate in the country." Because of state usury limits, Arkansas banks are known for low-rate cards.

Pulaski charges a $35 annual fee; the Providian card does not.

"We are always looking at ways to separate ourselves from the clutter," said Providian spokeswoman Laurie Cole. The San Francisco-based company is generally tight-lipped about product development, and offered little elaboration.

According to BAI Global, a Tarrytown, N.Y., company that tracks credit card solicitations, no other major card issuer offers a fixed rate of 7.9% or lower.

Consumer advocates have complained for years about high credit card rates, but they are not impressed by the new wave of low-rate products. Stephen Brobeck, executive director of Consumer Federation of America in Washington, said these offers are available only to low-risk consumers, and that people with spottier credit histories pay as much as 20%.

Consumer groups decry the industry's policy of raising the interest rate on a low-rate card when one or two payments are late. "Almost all consumers are at risk of getting this higher rate," Mr. Brobeck said.

Providian's disclosure statement tells customers that if they make a late payment, exceed their credit limit, or "significantly" increase their total debt, the 7.9% interest rate could be raised.

Moreover, the 7.9% applies only to new purchases. The rate for transferred balances varies between 12.9% and 21.9%, depending on the cardholder's credit history.

Nevertheless, it appears that annual percentage rates are falling, and card companies are lowering prices for desirable customers. Providian's solicitation letter says, "You've worked hard to establish an outstanding credit record, and it's time you were rewarded with the one card that recognizes your level of achievement."

"In 1989, the average interest rate was 19%," said Chris Batenhorst, vice president of BAI Global.

Despite the impression given by products like Providian's, BAI's figures show that rates have ticked upward, from an average of 10.51% in the first quarter to 10.76% in the second. Mr. Batenhorst attributed that to more- stringent underwriting standards.

The average interest rate on platinum cards, which generally are marketed to wealthier consumers, was 9.73% in the second quarter, Mr. Batenhorst said.

BAI's numbers represent the average of the introductory rate and the final go-to rate. Mr. Batenhorst said there are many more rate types today than there were 10 years ago. BAI factors in the introductory, go-to, penalty, balance transfer, and cash advance rates.

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