Chevy Chase Savings and Loan, which used to draw new customers by promising high rates for savers, has switched strategies and now is touting cut-rate credit cards with floating interest rates.

Chevy Chase became the first major financial institution in the Washington area to tie rates on its MasterCard and Visa accounts to the prime rate charged to large business borrowers.

The new credit cards will carry interest rates of 4.5 percentage points over prime. At the current prime rate of 9.5 percent, that means a 14 percent rate, at least four percentage points lower than other local banks' credit card rates and more than five points below the national average of 19.8 percent.

Economists yesterday predicted other financial institutions will cut the interest rates charged on their credit cards, because other rates have come down substantially and are expected to stay there because of the sluggish economy.

"They're leading the industry," said Marla R. Kaplan, the associate director of Bankcard Holders of America, a consumer group representing credit card users. "By offering credit cards at that rate, they're putting consumer credit loans more in line with the economy."

Officials at other area banks, most of which charge interest rates of 18 percent on the unpaid balances on their credit cards, attributed their higher rates partly to administrative costs.

"We try to structure our fees based on the types of billing, the frequency of statements and our annual membership fees," said S. Joseph Ward, vice president of the Bank of Virginia, where the credit card interest rate is 18 percent and the annual fee is $15.

Other area bank officials said that they charge 18 percent because it is needed to cover the cost of money to the institution, and consumers don't balk at that rate.

"Our credit card interest rate is 18 percent because of the cost of funds, the degree of acceptability on the part of customers, the degree of competitiveness offered by the rate and, of course, we desire to have some sort of profit," said an official at United Virginia Bank, which also charges a $15 annual fee.

"Each bank has different processing costs and bases their interest rates on a different cost of funds," said Jerry Peters, product manager at Dominion National Bank.

Alexander R. M. Boyle, vice chairman of Chevy Chase, disputed assertions that credit card rates have to be as high as 18 percent to cover the cost of funds. "The costs of funds have dropped, so it would be logical that the interest rates charged today would be lower than a year ago when market interest rates were generally higher," Boyle said.

Chevy Chase did not offer credit cards until about two months ago. Until the Maryland savings and loan crisis in May, Chevy Chase -- like many privately insured Maryland S&Ls -- used high-interest savings accounts to attract new business. As a federally insured institution, Chevy Chase is restricted to paying lower rates to savers.

Kaplan, the consumer credit card group official, also said that consumers are being charged more than is needed for banks to cover their costs of funds.

"The cost of money is a lot less than most banks would have consumers believe," Kaplan said. "When you're charging 19.8 percent and the prime is 9.5 percent, I think it would be difficult for any bank to justify such a high profit."

Economists said yesterday that consumers will see more competitive pressure on banks' credit card rates because of predictions that interest rates are not going to rise.

"Up to now, there has been very little pressure to reduce the credit card interest rates, partly because of the general expectation that the economy would be improving, which would put upward pressure on interest rates," said Bernard M. Markstein III, senior economist with Chase Econometrics.

"But the developing view is that the economy won't be improving so much and interest rates aren't going to go up by a significant amount," Markstein said. "It seems likely that we'll see more innovations of this sort that will put competitive pressure on interest rates of credit cards."