Credit cards: Hey, big spender, the Optima is for you
By Editor: Pauline Tai Reporter: Beth M. Gilbert

(MONEY Magazine) – Consumers are discovering that credit cards with attractive rates are not necessarily the best overall deal. Exhibit A: American Express' new 13.5% variable-rate Optima card. The Optima, says H. Spencer Nilson, publisher of the Nilson Report, is just another revolving card unless you charge up to $600 a month and travel abroad a great deal. The Optima is not cheap. The annual fee is only $15, but to qualify you must also maintain another American Express card. Therefore, your total annual fees are $60 for Green Card holders, $80 for Gold, or $250 for Platinum. The table shows how Optima compares with typical revolving cards in total annual carrying costs based on varying amounts of charges each month. At $100 a month, it ranks as the second most costly of the seven cards listed. At $600 a month, it ranks fourth. What's more, the Optima's 13.5% variable rate can soar. Unlike other variable cards that move in lockstep with base rates, Optima's rate is set at 1.7 to 1.8 times the prime rate and adjusted semiannually. So if the prime goes up a point to 8.75%, your rate will jump to 15.75% (8.75% times 1.8).

CHART: Total annual carrying costs Institution/tele- Current Annual Type of Grace for monthly charges of phone number (state) rate fee card period $100 $300 $600

American Express 13.50%* $15 Optima 25 days 212-477-5700 (New York) 60 with Green $130.24 $270.73 $481.46

Typical standard cards People's Bank 11.50 20 Visa/ 25 days 79.52 198.58 377.11 800-423-3273 (Connecticut) MasterCard

Manufacturers Bank- 13.60* No MasterCard None 69.77 209.32 418.64 Wilmington fee 302-366-8478 (Delaware)

USAA Federal Savings 14.00* No MasterCard 25 72.94 218.83 437.65 800-922-9092 (Texas) fee days

Sears' Discover Card 19.80 No Discover 25 104.78 314.34 628.67 800-858-5588 (Delaware) fee days

Typical premium cards Goldome FSB 14.50* 30 Visa 25 days 105.65 256.94 483.89 800-237-3703 (New York)

Citibank Preferred 16.80 50 Visa 25 days 138.19 314.57 579.14 800-645-9565 (South Dakota)

Notes: As of March 31, 1987. *Variable rates. Carrying costs include finance charges and annual fees. Source: Consumer Credit Card Rating Service, Box 5219, Ocean Park Station, Santa Monica, Calif. 90495; 213-392-7720; for the Credit Card Locator, send $10.

CREDIT: NO CREDIT