Bank of Baroda's subsidiary Bobcards Ltd will slash the interest rate on its credit cards to lowest ever level of 1.49 per cent per month, a move that will trigger off another rate cut war among banks and card issuers.

The company is also lining up a host of bonanzas for consumers and merchants before the festivals to add 100,000 customers and post 50 per cent growth in business at Rs 1,500 crore (Rs 15 billion) this fiscal.

"We have reduced our service charges (monthly interest rate) on credit cards from 2.25 to 1.99 per cent. We would further reduce it to 1.49 per cent for quality card holders who pay back within 45 days of transaction," Bobcards managing director S P Garg said on Thursday.

At present, some of the banks like State Bank of India and HDFC Bank charge near about 2.5 per cent monthly on credit cards while it is 2.75-3.0 per cent for most of the private and foreign banks.

Bobcards is also offering free life-time credit cards to BoB's customers having a minimum Rs 25,000 in fixed deposits.

The company also plans to offer several freebies to customers and merchants in the coming months, Garg said.

"We will focus on volumes. We want to add 100,000 more cardholders to the existing 700,000 credit holders and 250,000 debit card holders," he said.

Bobcards also plans to rope in more merchants to increase its point of sales by 5,000 from the existing 20,000.

The company targets to increase its outstanding balance of cardholders to Rs 125 crore (Rs 1.25 billion) by this fiscal end from Rs 95 crore (Rs 950 million) in 2003-04.