By John Sims

(MONEY Magazine) – As the credit-card war heats up, banks and card companies are cutting interest rates, packaging hotel or rental-car discounts, offering no-fee promotions and benefits such as buyer's insurance -- all to capture your dollars. So this is the time to take a hard look at your plastic: Which cards offer the best services for the least money? Which cards should you really not leave home without nowadays?

For more and more leisure travelers, the answer includes Visa and MasterCard, especially when the card is gold. American Express, though unrivaled for corporate and business travel, is losing the clear advantages it once offered. Three years ago, Visa and MasterCard were relative upstarts in the premium- card biz. But in 1988, MasterCard won a lawsuit that allowed both companies to designate their premium-priced cards as ''gold cards,'' the term AmEx coined in 1966. Each then introduced a package of enhancements on their gold cards that matched the perks offered by the AmEx Gold Card. Although American Express retains a couple of advantages that many users find desirable, some industry observers put Visa and MasterCard Gold on a par with AmEx Gold. Says Gerri Detweiler of Bankcard Holders of America, a nonprofit consumer education group that reviews all credit cards: ''American Express is more expensive, is not accepted in as many places and does not give you the option of paying over time.'' -- Card acceptance. Most cardholders' chief priority is how widely a card is accepted (see the box at right). Visa and MasterCard are taken in more than 9 million locations worldwide. By contrast, AmEx can be used in 3.4 million. And it would be difficult for American Express to narrow that gap even if it wanted to. AmEx charges merchants a stiff 2.5% to 4.5% of the total of each of its transactions; Visa and MasterCard collect 1% to 2% for their cards' use. Traditionally, AmEx has attracted merchants with its upmarket image and aggressive advertising. Many high-volume or well-established businesses prize AmEx, for example, for the reason Michael McCarty of Michael's restaurants in L.A. and New York City cites: ''American Express helps with promotions and advertising.'' But in tight times like these, saving 1% or 2% on a sale may make all the difference to some small businesses. Even upscale bastions such as Brooks Brothers, Cartier and Saks Fifth Avenue now accept all major credit cards. -- Comparing costs. Ordinarily, American Express requires you to pay bills in full each month, so there is no finance charge. Without income from financing, AmEx's annual fees are relatively high: $55 for its green card, $75 for gold and $300 for its super-service platinum. ''AmEx has an advantage,'' says Bankcard Holders' Detweiler, ''if you want the discipline of being forced to pay off the bill each month.'' And AmEx gives you better statements for record keeping than competing credit-card companies do. For an extra $15 a year, AmEx users can get revolving credit on its Optima card -- at a relatively reasonable rate of 16.25%. But of AmEx's 36 million cardholders, only about 3 million also carry Optima. Mass issuers of Visa and MasterCard, such as Citibank or Bank of America, charge as much as 19.8% on basic cards. If you have the credit rating to qualify, you can get Visa or MasterCard Gold cards with lower finance rates (though higher than normal annual fees). Citibank, for example, charges $50 a year for its 16.8% gold card; Bank of America, $48 for its 17% gold. Going one better, many smaller banks offer Visa or MasterCard Gold with even lower rates and fees if you can pass rigorous credit checks (for examples, see MONEY's Scorecard list on page 12 or send $5 to RAM, Box 1700, Frederick, Md. 21702, for CardTrak, a monthly listing of fees and rates from 500 banks). -- Rating service. AmEx pioneered travel benefits and service through its international offices and, in recent years, started an effective emergency hotline for gold-card holders (800-554-2639). As a result, the company enjoys an enviable reputation for helping travelers all over the world. Visa and MasterCard Gold are catching up, however. They now offer virtually equivalent emergency assistance programs (800-847-2911 for Visa; 800-622-7747 for MasterCard). -- Raising the credit ceiling. With its pay-as-you-go policy, AmEx has long been sold as a charge card with no preset spending limit. But RAM Research publisher Robert McKinley notes: ''The company tends to limit cardholders to 10 times their average volume. So you could get turned down when charging a high-ticket item.'' But American Express' Larry Kurlander notes that ''the rejection rate is tiny, substantially below 1%.'' By contrast, Visa and MasterCard limit their average cardholders to $2,400. For gold-card holders, the credit ceiling typically climbs to $6,700 nationwide or $7,500 on the coasts. Therefore, Dan Bohan, president of Washington, D.C.-based Omega Travel, suggests that if you use Visa or MasterCard for vacations, ''check your credit limit before you go.'' A simple letter can usually boost your $2,400 credit ceiling by as much as 50%. Gold- card holders can get 25% increases beyond their personal limits. H. Spencer Nilson, an L.A.-based credit-card industry adviser, suggests that you carry two cards, one for day-to-day spending, another to book hotels, air fares or rental cars because, until final payments on such charges are made, banks often freeze a sizable portion of the credit available. The plastic forecast. As competition heats up, you might see more credit- card promotions, such as last year's no-annual-fee deal on the AT&T Universal Visa card. Check out these developments in particular: -- A brand-new Visa card has just been announced by the Carlson Travel Network (800-388-8472), part of the Minneapolis-based $8.1 billion Carlson Cos. group. It features no annual fee for the first year, a 16.9% rate on its gold card, hotel upgrades, airline and cruise discounts and more. -- AmEx is offering its Optima card to nonmembers as a stand-alone card in test markets -- with interest rates below 14.5% in Virginia, at least. The company may take the program nationwide later this year. -- Prudential Insurance Co., through its Prudential Bank in Atlanta (800-322-2369), has just issued a Visa Gold card with no fee for the first year ($29 thereafter) and a 10.9% rate through December 31 (16.9% after that). Such competition might bring down the bloated interest rates mass issuers have maintained since the early '80s. If so, enjoy it; your savings could pay for a weekend getaway.


In a recent Americans and Their Money poll taken by the Gallup Organization, 300 MONEY subscribers rated the ''most useful'' credit-card services this way:

Accepted at most locations 91% Lowest registration or annual fee 77 Lowest interest rate (if applicable) 69 24-hour 800-number assistance 64 Access to ATMs or emergency cash 57