As countless consumers have found to their dismay, the towering interest that banks charge for credit-card purchases can defy both gravity and the laws of economics. While the prime rate for corporate customers has plunged from 20 1/ 2% to 9 1/2% since 1981 and the average new mortgage rate has dropped from 17.7% to 11.6% during that time, credit-card interest in most areas has remained at a sky-high level of more than 18% annually. That is a rate once associated with local loan sharks rather than with your friendly neighborhood banker.
Manufacturers Hanover Trust, the fourth largest U.S. bank, last...