One of two Arkansas banks offering the lowest credit card interest rates in the country said it has stopped taking out-of-state applications to keep its loan portfolio from being dominated by the cards.
Simmons First National Bank of Pine Bluff stopped processing new out-of-state applications on June 1. However, the bank will reconsider its decision at the end of the year, spokesman Robert Dill said Thursday.Simmons and Arkansas Federal Credit Card Service Co. have the lowest credit card interest rate - 8.5 percent. Arkansas Federal is still accepting out-of-state business.
Dill said Simmons has been swamped since news reports of the low rates began late last year. "Everybody in the world wanted our credit card," he said.
"We processed 72,000 applications in 1991. By June 1 of this year, we received an additional 65,000. We also have a backlog of 60,000 names to mail applications to," he said.
Consumers want cheaper credit cards, and "Arkansas got the brunt of that," Robert McKinley, president of RAM Research Corp. in Frederick, Md., said.
"Consumers are really looking for those lower rates and they're putting a lot of pressure on the big banks to lower them," McKinley said. For instance, he said, credit card giant Citibank's best customers have seen their credit card interest rate drop from 18.9 percent to 15.9 percent.
"Simmons was a particularly popular card because it had both the lowest interest in the nation, grace period and a reasonable fee," Gerri Detweiler, a spokeswoman for Bankcard Holders of American in Hendron Va., said Thursday.
Arkansas' usury law prohibits lenders based in the state from charging more than 5 percent above the federal discount rate, which stands at 3.5 percent.
Earlier this year, Simmons officer John Ramer cautioned there were limits to how many cards the bank could issue out-of-state. "A bank in Pine Bluff, Arkansas, cannot fund America on credit cards," he said.