(MONEY Magazine) – Now more than ever you must get a grip on your credit cards. Beginning Jan. 1, interest on revolving credit will no longer be fully deductible. Next year you will be able to write off only 65%, and the percentage will drop to zero by 1991. Also, while the interest you earn on your savings has hit record lows this past year, the national average for revolving credit cards remains at a high of 18.27%. Unfortunately, the states with the lowest interest ceilings -- Arkansas, Connecticut, Texas and Washington -- issue only 5% of the nation's cards. Indeed, more than half of the bank-card customers in Arkansas and Texas are using plastic from big out-of-state issuers that charge much steeper rates. The reason: banks in the low-rate states have been rejecting half of all applications in order to keep losses low, says H. Spencer Nilson of the Nilson Report. That percentage of discards, so to speak, will increase as banks get close to using up credit-card-loss reserve funds. Note also that banks charging low interest tend to add on hefty annual fees. To help you make the most of plastic, the Consumer Credit Card Rating Service of Santa Monica, Calif. has surveyed the interest rates, fees and grace periods of more than 250 cards issued by 150 institutions nationwide. The service published its findings in its Credit Card Locator newsletter ($10), including the eight best credit cards for the three basic types of card users -- that is, revolvers (who make minimum payments equal to 5% of their outstanding monthly balance), average (who alternate between paying in full one month and paying the minimum the next) and convenience users (who always pay in full). Revolvers should seek out low-interest issuers such as People's Bank of Bridgeport, Conn., where a rate war is currently being fought. Assuming you charge the national average of about $115 each month, the combined cost of annual fees and finance charges over a 12-month period at People's Bank will come to $88.45 a year. This compares with $140.50 at Citibank or Chase, and $147.83 at Mellon Bank. If you are an average user, your goal should be to find issuers with low annual fees, such as First Atlanta, which charges $12 for the standard card, or Colonial National, whose premium card costs $20 a year. Both banks are in Wilmington, Del. If you spend $210 a month, you will incur an annual cost of $39.69 for the First Atlanta card and $46.95 for the Colonial National. Convenience users get maximum benefits by seeking out issuers that charge no annual fees, such as Imperial Savings of San Diego, Calif. or First National Bank, also of Wilmington, Del. By shopping around and getting to know your own spending and paying habits, you can avoid annual fees, minimize finance charges by paying off balances within the grace period, and perhaps get away with a free short-term loan for up to 59 days.

CHART: Standard cards Issuer/telephone/ Interest Annual Type of Grace city/state of issuance rate fee card period Issuer/telephone/ Revolving credit Higher balances: People's Bank 11.50% $20 MasterCard 25 days 203-332-2222 Bridgeport, Conn. Lower balances: Buffalo, N.Y. 13.90 20 Visa None Goldome FSB 716-847-5945 Average use First Atlanta 17.88 12 MasterCard 25 days 302-323-2350 Wilmington, Del. Convenience use Imperial Savings 19.80 Free Visa 25 days 619-694-8753 San Diego, Calif. Premium cards Issuer/telephone/ Interest Annual Type of Grace city/state of issuance rate fee card period Revolving credit Marine Midland 14.95% $36 MasterCard 25 days 800-848-3400 Wilmington, Del. Dreyfus Consumer Bank 15.90 25 MasterCard 25 days 800-847-9700 Newark, Del. Average use Colonial National 17.40 20 MasterCard 25 days 800-223-3933 Wilmington, Del. Convenience use ; First National Bank 17.90 Free MasterCard 25 days 800-638-1520 Wilmington, Del. Notes: As of Oct. 1, 1986. Standard cards have fixed interest rates, while the premium cards have variable rates. All issuers listed here meet four crucial criteria: a demonstrated interest in building a nationwide card base, a favorable interest-fee/grace-period combination and a lack of geographic or deposit-relationship restrictions. Source: Consumer Credit Card Rating Service, Box 5219, OceanPark Station, Santa Monica, Calif. 90405; telephone 213-392-7720; for a copy of the Credit Card Locator, send $10 with a self- addressed envelope.