SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004


                               ------------------


                                    FORM 10-Q

                               ------------------


            x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

                                       OR

           o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                               ------------------


                         Commission file number 0-13497

                         PITNEY BOWES CREDIT CORPORATION
           Incorporated pursuant to the Laws of the State of Delaware


                               ------------------


       Internal Revenue Service -- Employer Identification No. 06-0946476

                   27 Waterview Drive, Shelton, CT 06484-4361
                                 (203) 922-4000


                               ------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes x No o

As of July 31, 1998,  460 shares of common  stock,  no par value,  with a stated
value of $100,000 per share, were outstanding, all of which were owned by Pitney
Bowes Inc., the parent of the Registrant.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b)
OF FORM 10-Q AND IS  THEREFORE  FILING  THIS FORM  WITH THE  REDUCED  DISCLOSURE
FORMAT.




<PAGE>


                                  Page 2 of 14
                         PITNEY BOWES CREDIT CORPORATION




<TABLE>
            Part I -- FINANCIAL INFORMATION

                ITEM 1. -- FINANCIAL STATEMENTS
    
<S>                                                                                                               <C>
                    Consolidated Statements of Income:
                      Three and Six Months Ended June 30, 1998 and 1997...................................        3
                    Consolidated Balance Sheets:
                      As of June 30, 1998 and December 31, 1997...........................................        4
                    Consolidated Statements of Cash Flow:
                      Six Months Ended June 30, 1998 and 1997.............................................        5
                    Notes to Consolidated Financial Statements............................................        6

                ITEM 2. -- MANAGEMENT'S NARRATIVE ANALYSIS OF
                    THE RESULTS OF OPERATIONS AND FINANCIAL
                    CONDITION.............................................................................        8


            Part II -- OTHER INFORMATION
                ITEM 1.-- LEGAL PROCEEDINGS...............................................................       11
                ITEM 6.-- EXHIBITS AND REPORTS ON FORM 8-K................................................       11
                SIGNATURE.................................................................................       12
                Exhibit (i) -- Computation of Ratio of Earnings
                    to Fixed Charges......................................................................       13
                Exhibit (ii)--  Financial Data Schedule...................................................       14

</TABLE>



<PAGE>



                                  Page 3 of 14
                         PART I -- FINANCIAL INFORMATION

                         ITEM 1. -- FINANCIAL STATEMENTS


                         PITNEY BOWES CREDIT CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)
                            (in thousands of dollars)


<TABLE>
                                                                        Three Months Ended June 30,        Six Months Ended June 30,
                                                                        ---------------------------        -------------------------

                                                                              1998            1997                1998          1997
                                                                              ----            ----                ----          ----
Revenue:
<S>                                                                      <C>             <C>                 <C>           <C>      
  Finance income...............................................          $ 177,259       $ 166,442           $ 331,265     $ 335,091
  Mortgage servicing revenue...................................             29,306          16,717              52,618        31,462
                                                                           -------         -------             -------       -------


    Total revenue..............................................            206,565         183,159             383,883       366,553
                                                                           -------         -------             -------       -------
Expenses:
  Selling, general and administrative..........................             53,900          42,140              97,423        83,741
  Interest.....................................................             40,387          51,098              80,786       100,993
  Provision for credit losses..................................             24,052          15,911              38,830        30,966
  Depreciation and amortization................................             14,231           9,833              26,493        20,337
                                                                           -------         -------             -------       -------

    Total expenses.............................................            132,570         118,982             243,532       236,037
                                                                           -------         -------             -------       -------
Income before income taxes.....................................             73,995          64,177             140,351       130,516
Provision for income taxes.....................................             21,903          19,391              41,410        40,492
                                                                           -------         -------             -------       -------
Net income.....................................................          $  52,092       $  44,786           $  98,941     $  90,024
                                                                           =======         =======             =======       =======
Ratio of earnings to fixed charges.............................              2.82X           2.25X               2.72X         2.28X
                                                                           =======         =======             =======       =======
</TABLE>








                 See Notes to Consolidated Financial Statements



<PAGE>



                                  Page 4 of 14
                         PITNEY BOWES CREDIT CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)
                            (in thousands of dollars)


<TABLE>
                                                                                 June 30,        December 31,
                                                                                   1998              1997
                                                                                ---------        ------------
ASSETS

<S>                                                                            <C>               <C>           
Cash.................................................................          $     48,562      $     36,320

Investments:
  Finance assets.....................................................             3,275,584         3,475,538
  Investment in leveraged leases.....................................               713,742           667,779
  Investment in operating leases, net of accumulated depreciation....                43,972            32,112
  Allowance for credit losses........................................              (121,880)         (116,588)
                                                                                  ---------         ---------

    Net investments..................................................             3,911,418         4,058,841
                                                                                  ---------         ---------

Mortgage servicing rights, net of accumulated amortization...........               360,256           220,912
Assets held for sale.................................................               394,812           305,228
Investment in partnership............................................               202,329           158,327
Loans and advances to affiliates.....................................                32,601           290,488
Other assets.........................................................               274,050           258,224
                                                                                  ---------         ---------

       Total assets..................................................          $  5,224,028      $  5,328,340
                                                                                  =========         =========

LIABILITIES

Senior notes payable within one year.................................          $  1,618,346      $  1,970,110
Short-term notes payable to affiliates...............................                   277                 -
Accounts payable to affiliates.......................................               177,923           232,917
Accounts payable and accrued liabilities.............................               196,786           199,905
Deferred taxes.......................................................               509,407           510,060
Senior notes payable after one year..................................             1,300,000         1,050,000
Subordinated notes payable...........................................               270,487           270,487
                                                                                  ---------         ---------

     Total liabilities...............................................             4,073,226         4,233,479
                                                                                  ---------         ---------

STOCKHOLDER'S EQUITY

Common stock.........................................................                46,000            46,000
Capital surplus......................................................                41,725            41,725
Retained earnings....................................................             1,063,077         1,007,136
                                                                                  ---------         ---------

     Total stockholder's equity......................................             1,150,802         1,094,861
                                                                                  ---------         ---------

       Total liabilities and stockholder's equity....................          $  5,224,028      $  5,328,340
                                                                                  =========         =========
</TABLE>







                 See Notes to Consolidated Financial Statements

<PAGE>



                                  Page 5 of 14
                         PITNEY BOWES CREDIT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (unaudited)
                            (in thousands of dollars)

<TABLE>

                                                                                  Six Months Ended June 30,
                                                                                ----------------------------

                                                                                      1998              1997
                                                                                      ----              ----
Operating Activities
<S>                                                                              <C>               <C>       
Net income.................................................................      $   98,941       $   90,024
Adjustments to reconcile net income to net cash provided by
 operating activities:
  Provision for credit losses..............................................          38,830           30,966
  Depreciation and amortization............................................          26,493           20,337
  (Decrease) increase in accounts payable to affiliates....................         (54,994)          13,399
  Increase in deferred taxes...............................................          44,888           39,142
  Decrease (increase) in other current assets..............................          25,731           (9,032)
  Increase in other non-current assets.....................................         (42,324)         (17,962)
  (Decrease) increase in accounts payable and accrued liabilities..........          (3,119)          21,488
  Other, net...............................................................             437            4,568
                                                                                  ---------        ---------

Net cash provided by operating activities..................................         134,883          192,930
                                                                                  ---------        ---------


Investing Activities
Investment in net finance assets...........................................        (700,689)        (988,567)
Investment in operating leases.............................................         (20,050)         (11,807)
Investment in leveraged leases.............................................         (50,217)         (13,328)
Investment in assets held for sale.........................................        (170,245)        (326,344)
Investment in partnership..................................................         (22,473)               -
Cash receipts collected under lease contracts, net of finance
  income recognized........................................................         892,415        1,197,206
Investment in mortgage service rights......................................        (159,584)         (66,234)
Loans and advances to affiliates, net......................................         257,916           (1,651)
Additions to equipment and leasehold improvements..........................          (5,227)          (6,711)
                                                                                  ---------        ---------

Net cash provided by (used in) investing activities........................          21,846         (217,436)
                                                                                  ---------        ---------

Financing Activities
(Decrease) increase in short-term debt.....................................        (226,487)         382,376
Settlement of long-term debt...............................................        (125,000)        (245,500)
Proceeds from issuance of senior notes.....................................         250,000                -
Short-term loans from affiliates...........................................               -          (43,800)
Dividends paid to Pitney Bowes Inc.........................................         (43,000)         (39,000)
                                                                                  ---------        ---------

Net cash (used in) provided by financing activities........................        (144,487)          54,076
                                                                                  ---------        ---------

Increase in cash...........................................................          12,242           29,570
Cash at beginning of period................................................          36,320           20,937
                                                                                  ---------        ---------

Cash at end of period......................................................      $   48,562       $   50,507
                                                                                  =========        =========

Interest paid..............................................................      $   82,191       $  113,056
                                                                                  =========        =========


Income taxes refunded, net.................................................      $  (12,892)      $   (4,744)
                                                                                  =========        =========
</TABLE>

                 See Notes to Consolidated Financial Statements

<PAGE>



                                  Page 6 of 14


                         PITNEY BOWES CREDIT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



Note 1 -- General

   The  accompanying  unaudited  consolidated  financial  statements  have  been
prepared in accordance with the instructions to Form 10-Q and do not include all
the  information  and  footnotes  required  by  generally  accepted   accounting
principles  for complete  financial  statements.  In the opinion of Pitney Bowes
Credit  Corporation  ("the Company" or "PBCC"),  all adjustments  (consisting of
only  normal  recurring  accruals)  necessary  to present  fairly the  financial
position as of June 30, 1998,  the results of  operations  for the three and six
months ended June 30, 1998 and 1997 and cash flows for the six months ended June
30, 1998 and 1997 have been  included.  Certain  amounts from prior periods have
been reclassified to conform to current period  presentation.  Operating results
for the three and six months ended June 30, 1998 are not necessarily  indicative
of the results that may be expected for the year ending December 31, 1998.
  These statements  should be read in conjunction with the financial  statements
and notes thereto  included in the Company's  Annual Report on Form 10-K for the
year ended December 31, 1997.


Note 2 -- New Accounting Pronouncement

   In June 1998,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133"). FAS 133 requires that an entity
recognize all  derivative  instruments  as either assets or  liabilities  on its
balance sheet and measure those instruments at fair market value. Changes in the
fair  value of those  instruments  will be  reflected  as gains or  losses.  The
accounting for the gains or losses depends on the intended use of the derivative
and the resulting designation. PBCC will be required to implement this statement
beginning January 1, 2000. The Company is currently in the process of evaluating
the potential impact of implementing this statement.

Note 3 --Finance Assets

The composition of the Company's finance assets is as follows:
<TABLE>

                                                                                  June 30,        December 31,
           (in thousands of dollars)                                                1998              1997
                                                                                 ---------        ------------
<S>                                                                            <C>               <C>        
            Gross finance receivables......................................    $  3,690,923      $ 3,926,540
            Unguaranteed residual valuation................................         444,351          461,051
            Initial direct costs deferred..................................          83,011           85,497
            Unearned income................................................        (942,701)        (997,550)
                                                                                  ---------        ---------

              Total finance assets.........................................     $ 3,275,584      $ 3,475,538
                                                                                  =========        =========
</TABLE>


Note 4 -- Mortgage Servicing Rights

   Mortgage servicing rights ("MSR") are recorded at the lower of amortized cost
or present value of the estimated  net servicing  income,  which does not exceed
fair market value,  and are amortized in proportion  to, and over the period of,
estimated net servicing income.  Fair value is estimated using a discounted cash
flow model which  incorporates  market discount and prepayment  rates as well as
other  assumptions  that market  participants  would use in their  estimates  of
future servicing income and expense. The Company's policy for evaluating MSR for
impairment is to stratify the mortgage servicing rights based on the predominant
risk  characteristics  of the underlying loans. Upon evaluation,  adjustments to
current period operations and the valuation allowance are made if any individual
portfolio stratum is deemed impaired.  Based on the evaluation performed at June
30, 1998, no impairment was recognized in the Company's MSR portfolio.


<PAGE>


                                  Page 7 of 14
                         PITNEY BOWES CREDIT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)
Note 5 -- Notes Payable
<TABLE>

The composition of the Company's notes payable is as follows:
<S>                                                                              <C>             <C>
                                                                                   June 30,     December 31,
         (in thousands of dollars)                                                   1998           1997
                                                                                  ---------     ------------
         Senior Notes Payable:
           Commercial paper at the weighted average
             interest rate of 5.57% (5.66% in 1997)........................     $   888,450      $ 1,361,110
           Notes payable against bank lines of credit and others at weighted
             average interest rates of 1.23% to 6.60% (1.68% in 1997)......         629,896          384,000
           Current installment of long-term debt due within one year at
              an interest rate of 6.31% (5.84% to 6.31% in 1997)...........         100,000          225,000
                                                                                  ---------        ---------

            Total senior notes payable due within one year.................       1,618,346        1,970,110

            Senior notes payable due after one year at interest rates of
              5.65% to 9.25% (6.06% to 9.25% in 1997)......................       1,300,000        1,050,000
                                                                                  ---------        ---------

            Total senior notes payable.....................................       2,918,346        3,020,110

         Short-term Notes Payable to Affiliates:
            Notes payable to Pitney Bowes Deutschland at a
              weighted average interest rate of 3.50%......................             277                -

         Subordinated Notes Payable:
            Non-interest bearing notes due Pitney Bowes Inc................         270,487          270,487
                                                                                  ---------        ---------

         Total notes payable...............................................     $ 3,189,110      $ 3,290,597
                                                                                  =========        =========
</TABLE>


Note 6 -- Subsequent Events

   On July 15, 1998,  the Company filed a shelf  registration  statement on Form
S-3 with the  Securities and Exchange  Commission.  The  registration  statement
allows PBCC to offer, in one or more series, its unsecured debt securities at an
aggregate initial offering price not to exceed $750,000,000. The debt securities
will be offered in amounts,  at prices and at terms to be determined at the time
of sale and which will be set forth in  supplements  to the  prospectus  forming
part  of the  shelf  registration  statement.  The  registration  statement  was
declared effective on July 28, 1998.



<PAGE>


                                  Page 8 of 14
                         PITNEY BOWES CREDIT CORPORATION

                   ITEM 2. -- MANAGEMENT'S NARRATIVE ANALYSIS
               OF THE RESULTS OF OPERATION AND FINANCIAL CONDITION



Results of Operations

Second Quarter of 1998 Compared to Second Quarter of 1997

   Finance  income in the second quarter of 1998 increased 6.5 percent to $177.3
million  compared  to  $166.4  million  in 1997.  Finance  income  for  internal
small-ticket  financing  programs  increased  5.5 percent to $87.2  million from
$82.6  million  primarily  due to  higher  income  from  fee- and  service-based
programs  and  a  higher  earning  asset  base.   Finance  income  for  external
large-ticket  financing  programs  decreased to $37.0 million from $44.2 million
primarily due to lower  external  large-ticket  investment  levels in accordance
with the Company's  strategy to shift the  foundation of the external  financing
business  from  asset-based  to fee- and service-  based  revenues.  Included in
finance  income for external  large-ticket  financing for the second  quarter of
1998 were  gains on asset  sales of $6.2  million.  Finance  income  related  to
external  small-ticket  financing programs increased to $53.1 million from $39.6
million  in the second  quarter of 1997.  Included  in the second  quarter  1998
amount is a gain on an asset sale of $14.9  million.  Also  included  is finance
income of $2.5 million from the Dictaphone and Monarch portfolios for the second
quarters  of both  1998 and 1997.  Aside  from  these  effects,  finance  income
decreased  primarily  due to lower  yields  on new  business  underwritten  with
tighter credit standards at Colonial Pacific Leasing Corporation ("CPLC").
   Revenue  generated  from mortgage  servicing  increased 75.3 percent to $29.3
million in the second  quarter of 1998 compared with $16.7 million in the second
quarter of 1997,  due to a larger  mortgage  servicing  portfolio  and  mortgage
refinancing fees, which is in keeping with the Company's fee-based income growth
strategy.
   Selling,  general and administrative ("SG&A") expenses increased 27.9 percent
to $53.9  million in the second  quarter of 1998  compared  to $42.1  million in
1997.  SG&A for  internal  small-ticket  financing  programs  increased to $16.5
million  from $15.8  million  principally  due to higher  professional  fees and
outsourcing  expenses related to new business  initiatives as well as consulting
services in support of strategic initiatives such as improvements to information
technology  and  customer  service.  SG&A for  external  large-ticket  financing
programs increased to $6.6 million in 1998 from $5.6 million in 1997 largely due
to costs related to an asset sale made in the second  quarter of 1998.  SG&A for
external  small-ticket  financing programs increased to $21.2 million from $15.3
million.  Included in these amounts were costs  incurred in  connection  with an
asset sale of $6.9 million in the second quarter of 1998. Also included are SG&A
expenses from the Dictaphone and Monarch  portfolios of $0.4 and $0.6 million in
1998 and 1997,  respectively.  Aside from these effects, SG&A expenses decreased
principally  due to lower  sales  assistance  fees paid by CPLC.  SG&A  expenses
related  to  mortgage  servicing  increased  to $9.6  million  in 1998 from $5.5
million  in  1997  primarily  due to the  administration  of a  larger  mortgage
servicing portfolio.
   Depreciation  on operating  leases was $1.6 million in the second  quarter of
1998  compared  to $2.3  million  in 1997  reflecting  a lower  operating  lease
investment  balance at June 30, 1998 compared to June 30, 1997.  Amortization of
mortgage  servicing  rights  was $11.2  million  in the  second  quarter of 1998
compared to $6.1 million in 1997 due to a larger mortgage  servicing  portfolio.
Costs associated with the Company's  participation  in partnership  transactions
were $0.8  million for the second  quarter of 1998  compared to $0.6 million for
the second  quarter of 1997.  This increase  reflects a  partnership  created in
connection with an asset transfer made during the fourth quarter of 1997.
   The provision  for credit losses was $24.1 million for the second  quarter of
1998  compared   with  $15.9  million  in  1997.   The  provision  for  internal
small-ticket  financing  programs  decreased  to $8.0  million from $8.9 million
primarily  due  to  lower  reserve   requirements  partly  offset  by  increased
provisions for new business initiatives. The provision for external small-ticket
financing  programs was $15.5 million for the second quarter of 1998 compared to
$6.6 million in 1997.  Included in these amounts was a credit loss  provision of
$8.0 million  recognized in connection  with an asset sale in the second quarter
of 1998.  These  amounts  also include  credit  losses from the  Dictaphone  and
Monarch  portfolios  of $0.4  million  in the  second  quarter  of 1998 and $0.5
million for the same period in 1997.  The  provision  for external  large-ticket
financing  programs was $0.6 million in the second  quarter of 1998  compared to
$0.4 million in 1997.
   The  Company's  allowance  for  credit  losses as a  percentage  of net lease
receivables  (net  investments  before  allowance  for  credit  losses  plus the
uncollected  principal  balance of receivables sold) increased from 2.55 percent
at December  31,  1997 to 2.63  percent at June 30,  1998.  PBCC  charged  $33.5
million and $25.8  million  against the allowance for credit losses in the first
half of 1998 and 1997, respectively.


<PAGE>


                                  Page 9 of 14
                         PITNEY BOWES CREDIT CORPORATION

                         MANAGEMENT'S NARRATIVE ANALYSIS
               OF THE RESULTS OF OPERATION AND FINANCIAL CONDITION



Results of Operations

Second Quarter of 1998 Compared to Second Quarter of 1997 (continued)

   Interest  expense was $40.4  million in the second  quarter of 1998  compared
with $51.1 million in 1997. The decrease  reflects  lower average  borrowings in
1998 combined with lower interest rates.  The lower borrowing levels were due to
decreased  external  large-ticket  asset  levels  offset by higher  internal and
external  small-ticket  asset levels as well as an increased  mortgage servicing
portfolio.  The effective  interest rate on average  borrowings was 5.70 percent
for the second  quarter of 1998  compared to 6.12 percent for the same period in
1997.  The Company does not match fund its  financing  investments  and does not
apply different interest rates to its various financing portfolios.
The effective tax rate for the second quarter of 1998 was 29.6 percent  compared
with 30.2 percent for the same period of 1997.  The decrease is primarily due to
lower  tax  provision   requirements   relating  to  certain   leveraged   lease
transactions.  The  Company's  ratio of earnings to fixed charges was 2.82 times
for the second  quarter of 1998  compared with 2.25 times for the same period of
1997. The increase  reflects the  disposition of external  large-ticket  assets,
proceeds from which were used for debt reduction.

Six Months of 1998 Compared to Six Months of 1997

   For the six months of 1998 compared to the same period of 1997, total revenue
increased 4.7 percent to $383.9 million, SG&A expenses increased 16.3 percent to
$97.4 million,  depreciation  and  amortization  increased 30.3 percent to $26.5
million,  the  provision  for  credit  losses  increased  25.4  percent to $38.8
million,  interest  expense  decreased  20.0  percent to $80.8  million  and the
provision for income taxes increased 2.3 percent to $41.4 million,  generating a
net income increase of 9.9 percent to $98.9 million.
   Except for the effect of the asset sales in the second  quarter of 1998,  the
factors that  affected  the change in each of the above income or expense  items
were  essentially  the same as those affecting the second quarter of 1998 versus
1997.

Financial Condition

Liquidity and Capital Resources

   The Company's  principal sources of funds are from operations and borrowings.
It has been PBCC's practice to use a balanced mix of debt maturities,  variable-
and fixed-rate debt and interest rate swap agreements to control  sensitivity to
interest  rate  volatility.  PBCC's  debt mix was 51 percent  short-term  and 49
percent  long-term  at June 30,  1998 and 60 percent  short-term  and 40 percent
long-term  at December  31,  1997.  PBCC's  swap-adjusted  variable-rate  versus
fixed-rate debt mix was 37 percent  variable-rate  and 63 percent  fixed-rate at
June 30, 1998 and 47 percent variable-rate and 53 percent fixed-rate at December
31, 1997. The Company may borrow through the sale of commercial paper, under its
confirmed  bank  lines  of  credit,  and by  private  and  public  offerings  of
intermediate- or long-term debt securities.
   On July 15, 1998,  the Company filed a shelf  registration  statement on Form
S-3 with the  Securities and Exchange  Commission.  The  registration  statement
allows PBCC to offer, in one or more series, its unsecured debt securities at an
aggregate  initial offering price not to exceed  $750,000,000.  The registration
statement was declared  effective on July 28, 1998.  (See Note 6 to CONSOLIDATED
FINANCIAL STATEMENTS).
   The Company's  utilization of derivative  instruments is normally  limited to
interest  rate swap  agreements  ("interest  rate  swaps") and foreign  currency
exchange  forward  contracts   ("foreign  currency   contracts").   The  Company
periodically  enters into  interest  rate swaps as a means of managing  interest
rate exposure.  The interest rate differential paid or received is recognized as
an adjustment to interest expense. The interest differential on the swap will be
offset against  changes in valuation of the assets  resulting from interest rate
movements. The Company is exposed to credit loss in the event of non-performance
by  the  counterparties  to  the  interest  rate  swaps  to  the  extent  of the
differential  between  fixed- and  variable-rates;  such  exposure is considered
minimal. The Company has entered into foreign currency contracts for the purpose
of minimizing its risk of loss from fluctuations in exchange rates in connection
with certain  intercompany loans and certain transfers to the Company by foreign
affiliates of foreign currency  denominated  lease  receivables.  The Company is
exposed to credit loss in the event of  non-performance by the counterparties to
the foreign currency  contracts to the extent of the difference between the spot
rate at the date of the contract delivery and the contracted rate; such exposure
is also considered minimal.


<PAGE>


                                  Page 10 of 14
                         PITNEY BOWES CREDIT CORPORATION

                         MANAGEMENT'S NARRATIVE ANALYSIS
               OF THE RESULTS OF OPERATION AND FINANCIAL CONDITION


Financial Condition

Liquidity and Capital Resources (continued)

   Since the Company  normally  enters into  derivative  transactions  only with
members of its banking group, the credit risk of these transactions is monitored
as part of the normal credit review of the banking group.  The Company  monitors
the market risk of derivative instruments through periodic review of fair market
values.
   In June 1998,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133"). FAS 133 requires that an entity
recognize all  derivative  instruments  as either assets or  liabilities  on its
balance sheet and measure those instruments at fair market value. Changes in the
fair  value of those  instruments  will be  reflected  as gains or  losses.  The
accounting for the gains or losses depends on the intended use of the derivative
and the resulting designation. PBCC will be required to implement this statement
beginning January 1, 2000. The Company is currently in the process of evaluating
the potential impact of implementing this statement.
   Gross finance  assets at the end of the second  quarter of 1998 decreased 5.8
percent from December 31, 1997. The decrease is principally  due to the shift in
emphasis from asset-based  investments in the external  large-ticket  segment to
fee-based  transactions.  Overall levels of lease  receivables  are in line with
management's  expectations.  The Company continues to actively pursue a strategy
of external  large-ticket asset sales,  thereby allowing it to focus on fee- and
service-based revenue rather than asset-based income.
   The  Company's  liquidity  ratio  (finance  contracts  receivable,  including
residuals,  expected  to be  realized in cash over the next 12 months to current
maturities of debt over the same period) was 1.16 times at June 30, 1998 and .89
times at December 31, 1997.
   The  Company  will  continue  to use cash to invest in  finance  assets  with
emphasis  on  internal  and  external   small-ticket  leasing  transactions  and
controlled investment in external large-ticket  financing programs.  The Company
believes that cash generated from  operations and  collections on existing lease
contracts  will  provide  the  majority  of  cash  needed  for  such  investment
activities. Borrowing requirements will be primarily dependent upon the level of
equipment  purchases  from Pitney  Bowes Inc.,  the level of external  financing
activity, capital requirements for new business initiatives, and the refinancing
of maturing  debt.  Additional  cash,  to the extent  needed,  is expected to be
provided from commercial  paper and  intermediate- or long-term debt securities.
While the Company  expects that market  acceptance  of its short- and  long-term
debt will  continue  to be  strong,  additional  liquidity  is  available  under
revolving credit facilities and credit lines.


--------------------------------------------------------------------------------
The Company wishes to caution readers that any forward-looking statements (those
which talk about the Company's or  management's  current  expectations as to the
future),  contained in this Form 10-Q or made by the  management  of the Company
involve  risks and  uncertainties  which may change  based on various  important
factors.  Some of these  factors  which  could  cause  the  Company's  financial
performance  to  differ  materially  from  the  expectations  expressed  in  any
forward-looking statement made by or on behalf of the Company include: the level
of business and financial  performance of Pitney Bowes,  including the impact of
changes in postal regulations; the impact of governmental financing regulations;
the  success of the Company in  developing  strategies  to manage  debt  levels,
including the ability of the Company to access the capital markets; the strength
of worldwide economies; the effects of and changes in trade, monetary and fiscal
policies and laws, and inflation and monetary fluctuations, including changes in
interest rates;  the willingness of customers to substitute  financing  sources;
and the success of the Company at managing  customer  credit risk and associated
collection and asset management efforts.


<PAGE>


                                  Page 11 of 14
                           PART II - OTHER INFORMATION

ITEM 1. -- LEGAL PROCEEDINGS

         From time to time, the Company is a party to lawsuits that arise in the
ordinary  course of its business.  These  lawsuits may involve  litigation by or
against the Company to enforce  contractual  rights under  vendor,  insurance or
other  contracts;  lawsuits  by or against the  Company  relating to  equipment,
service or payment  disputes with customers;  disputes with employees;  or other
matters.  The Company is currently a defendant in a number of lawsuits,  none of
which should have, in the opinion of management  and legal  counsel,  a material
adverse effect on the Company's financial position or results of operations.

ITEM 6. -- EXHIBITS AND REPORTS ON FORM 8-K

   a.   Financial Statements - see index on page 2
        Exhibits (numbered in accordance with Item 601 of Regulation S-K)
<TABLE>

<S>     <C>                <C>                                                     <C>
          Reg S-K                                                                  Incorporation
         Exhibits                            Description                           by Reference
         --------          -------------------------------------------------       ---------------

            (12)           Computation of Ratio of Earnings to Fixed Charges       See Exhibit (i)
                                                                                   on page 13
            (27)           Financial Data Schedule                                 See Exhibit (ii)
                                                                                   on page 14
</TABLE>

                There are no  unregistered  debt  instruments in which the total
                amount of securities authorized thereunder exceeds 10 percent of
                the total  assets  of the  Company.  Copies  of all  instruments
                defining  the rights of  securities  holders  are  available  on
                request.


   b. There were no  reports  on Form 8-K  issued  during the second  quarter of
      1998.







<PAGE>


                                  Page 12 of 14
                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.







                                           PITNEY BOWES CREDIT CORPORATION

                                           By         /s/ G. KIRK HUDSON
                                                    ----------------------
                                                        G. Kirk Hudson
                                                   Vice President - Finance
                                                   (Principal Financial and
                                                      Accounting Officer)
Dated:  August 13, 1998



<PAGE>

    



                                  Page 13 of 14
                                   Exhibit (i)
                Computation of Ratio of Earnings to Fixed Charges





<TABLE>
                                       Three Months Ended June 30,          Six Months Ended June 30,
                                       ---------------------------          -------------------------
                                             1998             1997              1998             1997
                                             ----             ----              ----             ----

<S>                                      <C>              <C>              <C>              <C>      
Income before income taxes..........    $  73,995        $  64,177         $ 140,351        $ 130,516
                                          -------          -------           -------          -------



Fixed charges:
  Interest on debt..................       40,387           51,098            80,786          100,993
  One third rent expense............          331              380               655              733
                                          -------          -------           -------          -------

Total fixed charges.................       40,718           51,478            81,441          101,726
                                          -------          -------           -------          -------

Earnings before fixed charges.......    $ 114,713        $ 115,655         $ 221,792        $ 232,242
                                          =======          =======           =======          =======

Ratio of earnings to
  fixed charges (1).................        2.82X            2.25X             2.72X            2.28X
                                          =======          =======           =======          =======

</TABLE>





(1) The ratio of  earnings to fixed  charges is  computed  by dividing  earnings
before fixed charges by fixed charges. Fixed charges consist of interest on debt
and one third of rent expense as representative of the interest portion.