For the credit card industry, 1986 has been a premium year. Pretax profits are estimated at $ 5 billion, up from $ 3.6 billion in 1985, according to H. Spencer Nilson, publisher of the authoritative Nilson Report.

Unfortunately for the industry, the record appears destined to stand for a long time to come.

"This is the most profitable year," Nilson said. "It will never be this profitable again."

Banks -- some of which made 30 percent of their total profits this year from credit card operations -- are increasingly feeling the pressures of lower interest rates and greater competition.

A year of concerted lobbying by consumer groups and congressmen to get card issuers to cut rates has begun to pay off. Although the average rate charged on bank cards has declined by less than a point to 18.15 percent, the momentum may finally be there.

Last week, the third-largest issuer, Chase Manhattan with 4.2 million accounts, lowered its rate on its regular Visa and Mastercard to 17.5 percent from 19.8 percent. The rate on its premium Visa card went to 16.5 percent.

"Chase anticipates that Citi will lower rates on its standard cards and wanted to get there ahead," said Nilson. Citibank, the foremost issuer with 7 million accounts, lowered the interest rates on its preferred Visa to 16.8 percent several week ago.

"The bank card market has begun to crack," said Rep. Charles E. Schumer (D-N.Y.), who has been a protagonist in the struggle for lower rates.

"With Chase's decision to lower its rate . . . the crack has become a stream and soon it will become a torrent. I believe the same thing can happen with department store credit card rates," Schumer said.

He recently issued a list of rates on in-house charge cards issued by the largest department stores in the country. The average annual interest rate charged by the 12 biggest was 19.9 percent.

Heading the list were Hecht's, based in Virginia; Higbees, headquartered in Ohio, and the Montgomery Ward, Marshall Field and Carson Pirie Scott chains, all based in Illinois. Schumer urged shoppers to take out personal bank loans, whose rates run around 14.7 percent, rather than pay the store rates.

Hecht's vice president for finance Tom Singleton defended the 21.6 percent rate by pointing out that stores unlike banks do not charge annual fees. The ratio of in-house cards to Visa and Mastercards used by Hecht's customers is 2 or 3 to 1, he added, an indication that rate sensitivity is not strong among them.

Elgie Holstein, director of Bankcard Holders of America, said calls to his organization show that two-thirds of consumers are interested in rates. Chase hopes that lower rates, as part of a package of enhancements and fee waivers, will lure 1.5 million new cardholders.

But Nilson countered that less than 5 percent of cardholders shift cards because of rates on carrying charges. As for Chase's 10 percent travel rebates on hotels and 5 percent on air fares and car rentals, Nilson dismisses them as a marketing ploy. "Enhancements are a bunch of junk; most of them are never used," he scoffed.

American Express disagrees. In announcing last week an extension of its manufacturers' warranty for products purchased with its card, President Ed Cooperman called it "one of the most popular programs ever among our card members."

Chase announced it would waive its annual $ 20 fee on its regular card if the holder charged $ 2,400 worth of goods and services each year; the $ 45 fee for a premium card would be waived after $ 5,000 in annual purchases.

In a different twist, Bank of Virginia has scaled the interest rate to the balance: the higher the outstanding monthly balance, the lower the rate.

By offering to eliminate annual fees, Chase is in one sense bucking the tide of rising fees accompanying lower rates. On the other hand, it is following the trend toward more use of lucrative cash advances, Nilson said. It raised the fee on cash advances from 50 cents per transaction to 2 percent of the total value, with a maximum of $ 10.

These transactions, which incur interest charges immediately since there is no grace period, can constitute up to 20 percent of small banks' accounts outstanding.

Traditionally, half of all credit card users pay off their balance monthly while the rest incur charges for revolving credit. Some studies indicate that since the tax deduction on consumer interest will be phased out starting next year, fewer persons will run up their card balances.

On the other hand, consumer debt has continued to increase, fueled in part by revolving credit.

In an attempt to make up the revenue lost from lower interest rates, many banks are raising fees for convenience users -- those who always pay off in full at the end of the month. Citibank, for example, accompanied the 3 point decline in rates on its preferred Visa card with a $ 10 boost in the annual fee to $ 50.

Citibank, which owns the Choice card, has offered it free of annual fee but with a 21 percent interest rate since 1980. For the past three months, the bank has been test marketing a $ 20 annual fee accompanied by a lower rate.

The newest major entrant in the field, Sears' Discover card, has no annual fee and none is contemplated for now, said a spokeswoman. It charges 19.8 percent interest.

"The general move is toward lower rates in the 13-14 percent range," said Nilson.

Affinity cards -- those issued to members of a group -- carry even lower rates. For example, the Bank of New York recently agreed to issue 200,000 cards with a 12.5 percent rate to members of the American Federation of State, County and Municipal Employees.

"At the same time, I expect the annual fee for a premium card to climb to $ 75 in future; a standard card should cost $ 40," Nilson added.

Another competitor driving down interest rates is the home equity loan. Although the initial fees are much higher than on a credit card, interest rates are significantly lower -- often 2 points over the prime rate -- and interest remains largely tax deductible under the new law. Holstein predicts that plastic cards secured by a home equity line of credit will soon become commonplace.