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

                       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 September 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 October 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.


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<PAGE>


                                  Page 2 of 15
                         PITNEY BOWES CREDIT CORPORATION


<TABLE>


            Part I -- FINANCIAL INFORMATION

                ITEM 1. -- FINANCIAL STATEMENTs
<S>                                                                                                               <C>
                    Consolidated Statements of Income:
                      Three and Nine Months Ended September 30, 1998 and 1997.............................        3
                    Consolidated Balance Sheets:
                      As of September 30, 1998 and December 31, 1997......................................        4
                    Consolidated Statements of Cash Flow:
                      Nine Months Ended September 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.............................................................................       10


            Part II -- OTHER INFORMATION
                ITEM 1.-- LEGAL PROCEEDINGS...............................................................       12
                ITEM 6.-- EXHIBITS AND REPORTS ON FORM 8-K................................................       12
                Signature.................................................................................       13
                Exhibit (i) -- Computation of Ratio of Earnings
                    from Continuing Operations to Fixed Charges...........................................       14
                Exhibit (ii)--  Financial Data Schedule...................................................       15


</TABLE>


<PAGE>



                                  Page 3 of 15
                         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 September 30,    Nine Months Ended September 30,
                                                                --------------------------------    -------------------------------

                                                                       1998              1997              1998             1997
                                                                       ----              ----              ----             ----
Revenue:
<S>                                                               <C>               <C>               <C>              <C>      
  Finance income........................................          $ 127,644         $ 131,821         $ 373,901        $ 394,567
  Mortgage servicing revenue............................             41,698            19,520            94,316           50,982
                                                                    -------           -------           -------          -------


    Total revenue.......................................            169,342           151,341           468,217          445,549
                                                                    -------           -------           -------          -------
  Selling, general and administrative...................             32,215            34,121            95,571           89,653
  Interest..............................................             28,542            39,081            88,245          118,210
  Depreciation and amortization.........................             27,059            11,510            53,465           31,753
  Provision for credit losses...........................              8,307             7,067            26,089           25,975
                                                                    -------           -------           -------          -------

    Total expenses......................................             96,123            91,779           263,370          265,591
                                                                    -------           -------           -------          -------  
  
Income from continuing operations before income taxes...             73,219            59,562           204,847          179,958
Provision for income taxes..............................             22,027            15,696            60,100           52,317
                                                                    -------           -------           -------          ------- 
   
Income from continuing operations.......................             51,192            43,866           144,747          127,641

Discontinued operations.................................              2,367             3,623             7,753            9,872
                                                                    -------           -------           -------          -------

Net income..............................................         $   53,559        $   47,489         $ 152,500       $  137,513
                                                                    =======            ======           =======          ======= 
Ratio of earnings from continuing operations to fixed charges         3.54X             2.51X             3.30X            2.51X
                                                                    =======            ======           =======          =======



</TABLE>





                 See Notes to Consolidated Financial Statements



<PAGE>



                                  Page 4 of 15
                         PITNEY BOWES CREDIT CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)
                            (in thousands of dollars)

<TABLE>

                                                                               September 30,     December 31,
                                                                                   1998              1997
                                                                               ------------      ------------
ASSETS

<S>                                                                            <C>             <C>           
Cash.................................................................          $     56,098    $       36,320

Investments:
  Finance assets.....................................................             2,594,005         3,475,538
  Investment in leveraged leases.....................................               755,161           667,779
  Investment in operating leases, net of accumulated depreciation....                31,582            32,112
  Allowance for credit losses........................................               (75,301)         (116,588)
                                                                                  ---------         ---------

    Net investments..................................................             3,305,447         4,058,841
                                                                                  ---------         ---------

Mortgage servicing rights, net of accumulated amortization...........               366,657           220,912
Assets held for sale.................................................               397,976           305,228
Investment in partnership............................................               204,935           158,327
Loans and advances to affiliates.....................................               319,310           290,488
Net assets of discontinued operation.................................               776,941                 -
Other assets.........................................................               252,275           258,224
                                                                                  ---------         ---------

      Total assets...................................................          $  5,679,639      $  5,328,340
                                                                                  =========         =========

LIABILITIES

Senior notes payable within one year.................................          $  1,837,384      $  1,970,110
Short-term notes payable to affiliates...............................                96,500                 -
Accounts payable to affiliates.......................................               191,145           232,917
Accounts payable and accrued liabilities.............................               198,351           199,905
Deferred taxes.......................................................               505,512           510,060
Senior notes payable after one year..................................             1,382,000         1,050,000
Subordinated notes payable...........................................               285,886           270,487
                                                                                  ---------         ---------

      Total liabilities..............................................             4,496,778         4,233,479
                                                                                  ---------         ---------

STOCKHOLDER'S EQUITY

Common stock.........................................................                46,000            46,000
Capital surplus......................................................                41,725            41,725
Retained earnings....................................................             1,095,136         1,007,136
                                                                                  ---------         ---------

     Total stockholder's equity......................................             1,182,861         1,094,861
                                                                                  ---------         ---------

       Total liabilities and stockholder's equity....................          $  5,679,639      $  5,328,340
                                                                                  =========         =========

</TABLE>






                 See Notes to Consolidated Financial Statements

<PAGE>



                                  Page 5 of 15
                         PITNEY BOWES CREDIT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (unaudited)
                            (in thousands of dollars)

<TABLE>

                                                                                 Nine Months Ended September 30,
                                                                                ----------------------------------

                                                                                      1998                    1997
                                                                                      ----                    ----
Operating Activities
<S>                                                                               <C>                    <C>      
Income from continuing operations..........................................       $ 144,747              $ 127,641
Income from discontinued operations........................................           7,753                  9,872
Adjustments   to  reconcile  net  income  to  net  cash  provided  by  operating
 activities:
   Provision for credit losses.............................................          53,085                 44,352
   Depreciation and amortization...........................................          53,567                 31,893
   Changes in assets and liabilities:
      Other current assets.................................................             702                (12,658)
      Other non-current assets.............................................         (15,602)               (24,733)
      Accounts payable to affiliates.......................................        (41,772)                 (2,167)
      Deferred taxes.......................................................          40,993                 25,254
      Accounts payable and accrued liabilities.............................         20,446                  10,650
  Other, net...............................................................          11,878                  5,915
                                                                                  ---------              ---------

Net cash provided by operating activities..................................         275,797                216,019
                                                                                  ---------              ---------

Investing Activities
Investment in net finance assets...........................................     (1,087,555)             (1,496,038)
Investment in operating leases.............................................        (80,412)                (11,807)
Investment in leveraged leases.............................................        (21,560)                (23,934)
Investment in assets held for sale.........................................       (367,932)               (509,060)
Investment in partnership..................................................        (23,435)                      -
Cash receipts collected under lease contracts, net of finance
  income recognized........................................................       1,303,928              1,947,084
Investment in mortgage service rights......................................       (189,252)                (71,589)
Loans and advances to affiliates, net......................................        (28,822)                (12,397)
Additions to equipment and leasehold improvements..........................         (7,652)                 (6,711)
                                                                                  ---------              ---------

Net cash used in investing activities......................................        (502,692)              (184,452)
                                                                                  ---------              ---------

Financing Activities
(Decrease) increase in short-term debt.....................................       (107,726)                388,021
Settlement of long-term debt...............................................       (225,000)               (245,500)
Proceeds from issuance of senior notes.....................................         532,000                      -
Proceeds from issuance of subordinated debt................................          15,399                 41,333
Short-term notes payable to affiliates.....................................         96,500                (139,400)
Dividends paid to Pitney Bowes Inc.........................................        (64,500)                (58,500)
                                                                                  ---------              ---------

Net cash provided by (used in) financing activities........................        246,673                 (14,046)
                                                                                  ---------              ---------

Increase in cash...........................................................          19,778                 17,521
Cash at beginning of period................................................          36,320                 20,937
                                                                                  ---------              ---------

Cash at end of period......................................................    $     56,098             $   38,458
                                                                                  =========              =========

Interest paid..............................................................    $   125,003              $  150,420
                                                                                  =========              =========


Income taxes refunded, net.................................................    $   (23,680)             $  (18,155)
                                                                                  =========              =========
</TABLE>

                 See Notes to Consolidated Financial Statements

<PAGE>


                                  Page 6 of 15
                         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  September  30,  1998 and  December  31,  1997,  the  results of
operations  for the three and nine months ended  September 30, 1998 and 1997 and
cash  flows for the nine  months  ended  September  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 nine months
ended September 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 -- Discontinued Operations

 On October 30, 1998, the Company's  wholly owned  subsidiary,  Colonial Pacific
Leasing  Corporation  ("CPLC"),   transferred  the  operations,   employees  and
substantially  all assets  related  to its  broker-oriented  external  financing
business to General Electric Capital Corporation ("GECC").  The Company received
approximately $790 million at closing,  which approximates the book value of net
assets sold or otherwise  disposed of together with related  transaction  costs.
The transaction is subject to post-closing  adjustments pursuant to the terms of
the purchase agreement with GECC executed on October 12, 1998.
 Operating results of CPLC have been segregated and reported as discontinued
operations  for the three and nine  months  ended  September  30, 1998 and 1997.
Prior  year  results  have been  reclassified  to conform  to the  current  year
presentation.   Net  assets  of  discontinued  operation  have  been  separately
classified in the  accompanying  balance sheet at September 30, 1998.  Cash flow
impacts of discontinued  operations have not been segregated in the accompanying
statements of cash flows for the nine months ended  September 30, 1998 and 1997.
Finance  income of CPLC was $32.0 million and $38.1 million for the three months
ended September 30, 1998 and 1997,  respectively,  and $117.0 million and $110.4
million for the nine months  ended  September  30, 1998 and 1997,  respectively.
Interest expense allocated to discontinued operations was $9.6 million and $12.1
million for the three months ended  September  30, 1998 and 1997,  respectively,
and $30.6 million and $34.0 million for the nine months ended September 30, 1998
and 1997,  respectively.  Interest expense has been allocated based on the level
of CPLC's  intercompany  borrowing,  charged at the Company's  weighted  average
borrowing rate.


Note 3 -- 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 impact of implementing this statement.

Note 4 -- Finance Assets
<TABLE>

The composition of the Company's finance assets from continuing operations is as
follows:

                                                                                September 30,     December 31,
           (in thousands of dollars)                                                   1998              1997
                                                                                  ---------         ---------
<S>                                                                            <C>              <C>         
            Gross finance receivables......................................    $  2,913,373     $  3,926,540
            Unguaranteed residual valuation................................         403,255          461,051
            Initial direct costs deferred..................................          43,213           85,497
            Unearned income................................................        (765,836)        (997,550)
                                                                                  ---------        ---------

              Total finance assets.........................................    $  2,594,005     $  3,475,538
                                                                                  =========        =========
</TABLE>

<PAGE>


                                  Page 7 of 15
                         PITNEY BOWES CREDIT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


Note 5 -- 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
September  30,  1998,  an  $8.9  million  valuation  allowance   adjustment  was
recognized in the Company's MSR portfolio.

Note 6 -- Notes Payable

The composition of the Company's notes payable is as follows:
<TABLE>

                                                                               September 30,     December 31,
         (in thousands of dollars)                                                 1998              1997
                                                                                 ---------         ---------
         Senior Notes Payable:
           Commercial paper at the weighted average
<S>                                                                            <C>              <C>        
             interest rate of 5.51% (5.66% in 1997)........................     $ 1,055,200      $ 1,361,110
           Notes payable against bank lines of credit and others at weighted
             average interest rates of 1.16% (1.68% in 1997)...............         582,184          384,000
           Current installment of long-term debt due within one year at
              an interest rate of 6.54% (5.84% to 6.31% in 1997)...........         200,000          225,000
                                                                                  ---------        ---------

            Total senior notes payable due within one year.................       1,837,384        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)......................       1,382,000        1,050,000
                                                                                  ---------        ---------

            Total senior notes payable.....................................       3,219,384        3,020,110

         Short-term Notes Payable to Affiliates:
            Notes payable to Pitney Bowes Inc. at an
            interest rate of 5.67%.........................................         96,500                 -
         Subordinated Notes Payable:
            Non-interest bearing notes due Pitney Bowes Inc................         285,886          270,487
                                                                                  ---------        ---------

         Total notes payable...............................................     $ 3,601,770      $ 3,290,597
                                                                                  =========        =========
</TABLE>


   On September 30, 1998, certain  partnerships  controlled by affiliates of the
Company issued a total of $282,000,000 of Series A and Series B Secured Floating
Rate Senior Notes (the "Notes").  The Notes are due in 2001 and bear interest at
a floating rate of LIBOR plus 0.65%,  set as of the quarterly  interest  payment
dates.  The  proceeds  from the Notes were used to  purchase  subordinated  debt
obligations from Pitney Bowes Inc. ("PBI Obligations"). The PBI Obligations have
a principal amount of $282,000,000 and bear interest at a floating rate of LIBOR
plus 1.0%, set as of the quarterly interest payment dates.
   In July 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.




<PAGE>



                                  Page 8 of 15
                         PITNEY BOWES CREDIT CORPORATION

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



Results of Operations

 On October 30, 1998, the Company's  wholly owned  subsidiary,  Colonial Pacific
Leasing  Corporation  ("CPLC"),   transferred  the  operations,   employees  and
substantially  all assets  related  to its  broker-oriented  external  financing
business to General Electric Capital Corporation  ("GECC"). As a result, CPLC is
being accounted for as  discontinued  operations in the  accompanying  financial
statements.  Accordingly,  the discussion that follows concerns only the results
of continuing  operations  The Company  received  approximately  $790 million at
closing,  which  approximates  the book  value of net assets  sold or  otherwise
disposed of together with related  transaction costs. The transaction is subject
to post-closing adjustments pursuant to the terms of the purchase agreement with
GECC executed on October 12, 1998.

Third Quarter of 1998 Compared to Third Quarter of 1997

   Finance  income  from  continuing  operations  in the third  quarter  of 1998
decreased  3.2 percent to $127.6  million  compared  to $131.8  million in 1997.
Finance income for internal  financing  programs increased 10.8 percent to $90.2
million  from  $81.3  million  primarily  due to  higher  income  from  fee- and
service-based  programs  and a higher  earning  asset base.  Finance  income for
commercial and  industrial  financing  programs  decreased to $37.5 million from
$50.5 million  primarily due to lower external  investment  levels in accordance
with the  Company's  strategy  to shift the  foundation  of the  commercial  and
industrial  financing  business  from  asset-based  to fee- and  service-  based
revenues.  Included  in this  amount is a gain of $0.7  million on an asset sale
made in the third quarter of 1998 as well as finance  income from the Dictaphone
and Monarch portfolios of $2.2 million and $2.4 million in the third quarters of
1998 and 1997, respectively. Revenue generated from mortgage servicing increased
to $41.7 million in the third quarter of 1998 compared with $19.5 million in the
third quarter of 1997, due to a larger mortgage servicing portfolio, the sale of
selected  investments  and  mortgage  refinancing  fees,  in  keeping  with  the
Company's fee-based income growth strategy.
   Selling,  general and  administrative  ("SG&A")  expenses  decreased to $32.2
million in the third quarter of 1998 compared to $34.1 million in 1997. SG&A for
internal  financing  programs  increased  to $17.0  million  from $16.0  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 commercial and industrial  financing programs decreased to $6.9 million
in 1998 from $12.3  million  in 1997.  Included  in the prior  year  amount is a
charge of  approximately  $5.0  million  for costs  related to the  transfer  of
certain  commercial  and industrial  finance assets made in 1997.  SG&A expenses
related  to  mortgage  servicing  increased  to $8.3  million  in 1998 from $5.9
million  in  1997  primarily  due to the  administration  of a  larger  mortgage
servicing portfolio.
   Depreciation  on operating  leases was $1.5  million in the third  quarter of
1998  compared  to $2.7  million  in 1997  reflecting  a lower  operating  lease
investment  balance at  September  30, 1998  compared  to  September  30,  1997.
Amortization of mortgage servicing rights was $23.4 million in the third quarter
of 1998  compared  to $8.2  million  in 1997.  The  increase  is due to a larger
mortgage servicing portfolio and the valuation allowance  adjustment recorded in
the third quarter of 1998. Costs associated with the Company's  participation in
partnership  transactions  were  $1.6  million  for the  third  quarter  of 1998
compared  to $0.6  million  for the third  quarter  of 1997.  This  increase  is
primarily due to a partnership  created in  connection  with the asset  transfer
made during the fourth quarter of 1997.
   The  provision  for credit  losses was $8.3 million for the third  quarter of
1998  compared with $7.1 million in 1997.  The provision for internal  financing
programs  increased  to $7.6  million  for the third  quarter  of 1998 from $6.7
million primarily due to increased provisions for new business initiatives.  The
provision for commercial and industrial  financing programs was $0.7 million for
the third quarter of 1998 compared to $0.4 million in 1997, mainly  attributable
to the Dictaphone and Monarch portfolios.
   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) decreased from 2.55 percent
at December 31, 1997 to 2.4 percent at September  30, 1998.  PBCC charged  $54.9
million and $38.7  million  against the allowance for credit losses in the first
nine months of 1998 and 1997, respectively.


<PAGE>



                                  Page 9 of 15
                         PITNEY BOWES CREDIT CORPORATION

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

Results of Operations

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

   Interest expense was $28.5 million in the third quarter of 1998 compared with
$39.1 million in 1997. The decrease  reflects  lower average  borrowings in 1998
combined  with lower  interest  rates.  The lower  borrowing  levels were due to
decreased  commercial  and  industrial  asset levels  offset by higher  internal
financing asset levels as well as an increased mortgage servicing portfolio. The
effective  interest  rate on average  borrowings  was 5.57 percent for the third
quarter  of 1998  compared  to 6.05  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  third  quarter  of 1998  was 30.1  percent
compared  with  26.4  percent  for the same  period  of 1997.  The  increase  is
primarily due to lower state tax  provisions  related to certain  commercial and
industrial transactions during the third quarter of 1997.
   The Company's ratio of earnings from  continuing  operations to fixed charges
was 3.54 times for the third  quarter of 1998  compared  with 2.51 times for the
same period of 1997.  The increase  reflects the  disposition  of commercial and
industrial assets, proceeds from which were used for debt reduction.

Nine Months of 1998 Compared to Nine Months of 1997
   For the nine  months  of 1998  compared  to the same  period  of 1997,  total
revenue from continuing operations increased 5.1 percent to $468.2 million, SG&A
expenses  increased 6.6 percent to $95.6 million,  depreciation and amortization
increased  68.4  percent to $53.5  million,  the  provision  for  credit  losses
increased 0.4 percent to $26.1 million,  interest expense decreased 25.3 percent
to $88.2 million and the provision  for income taxes  increased  14.9 percent to
$60.1 million,  generating a net income from continuing  operations  increase of
13.4 percent to $144.7 million.  Income from discontinued  operations  decreased
21.5 percent to $7.8 million.  Total net income increased 10.9 percent to $152.5
million.
   The  fluctuations  above include  certain  non-recurring  transactions  which
affect the comparability of results between periods. These include the effect of
asset  sales  made  during the  second  and third  quarters  of 1998 and the MSR
valuation  allowance  adjustment  recognized  during the third  quarter of 1998.
Results for 1997  include a charge of  approximately  $5.0 million for costs and
asset valuation related to an asset transfer completed during 1997.
Except for these  non-recurring  transactions,  the factors  that  affected  the
change in each of the above income or expense items were essentially the same as
those affecting the third 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 62 percent  short-term  and 38
percent long-term at September 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 47 percent  variable-rate  and 53 percent  fixed-rate at
both  September 30, 1998 and 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 September 30, 1998, certain partnerships controlled or owned by affiliates
of the Company issued a total of  $282,000,000  of Series A and Series B Secured
Floating  Rate Senior  Notes (the  "Notes").  The Notes are due in 2001 and bear
interest  at a  floating  rate of  LIBOR  plus  0.65%,  set as of the  quarterly
interest  payment  dates.  The  proceeds  from the Notes  were used to  purchase
subordinated  debt obligations from Pitney Bowes Inc. ("PBI  Obligations").  The
PBI Obligations  have a principal  amount of $282,000,000 and bear interest at a
floating  rate of LIBOR  plus 1.0%,  set as of the  quarterly  interest  payment
dates. (See Note 6 to CONSOLIDATED FINANCIAL STATEMENTS).
   In July 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.  (See Note 6 to
CONSOLIDATED FINANCIAL STATEMENTS).


<PAGE>



                                  Page 10 of 15

                         PITNEY BOWES CREDIT CORPORATION

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


Financial Condition

Liquidity and Capital Resources (continued)

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 a  foreign  currency  contract  for the  purpose  of
minimizing  its risk of loss from  fluctuations  in exchange rates in connection
with certain intercompany transactions. 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.
   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 third  quarter of 1998  decreased 2.4
percent from December 31, 1997. The decrease is principally  due to the shift in
emphasis from asset-based  investments in the commercial and industrial  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 commercial and industrial  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 1.00 times at  September  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  leasing   transactions  and  controlled   investment  in
commercial and industrial  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  commercial  and  industrial  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 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.
   In October 1998, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement  of  Financial   Accounting   Standards  No.  134,   "Accounting   for
Mortgage-Based  Securities  Retained after the  Securitization of Mortgage Loans
Held for Sale by a Mortgage  Banking  Enterprise"  ("FAS 134"). FAS 134 requires
that an entity classify  mortgage-based  securities or other interests  retained
after the  securitization  of  mortgage  loans  held-for-sale,  as a current  or
non-current  investment  based on the entity's  ability and intent to hold those
investments.  The classification of the investment determines whether changes in
its market value will be included in current earnings.  PBCC will be required to
implement this statement  beginning January 1, 1999. The Company is currently in
the process of evaluating the potential impact of implementing this statement.


<PAGE>


                                  Page 11 of 15
                         PITNEY BOWES CREDIT CORPORATION

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


Year 2000

   In 1997,  the  Company's  parent,  Pitney  Bowes Inc.,  established  a formal
worldwide  program  to  identify  and  resolve  the impact of the Year 2000 date
processing   issue   on  its   business   systems,   products   and   supporting
infrastructure.  PBCC is  included  as part of this  program.  This  includes  a
comprehensive  review  of  information   technology  (IT)  and  non-IT  systems,
software,  and embedded  processors.  The program structure has strong executive
sponsorship  and consists of a Year 2000 steering  committee of senior  business
and  technology  management,  a Year 2000 program  office of  full-time  project
management,  and subject  matter  experts and  dedicated  business  unit project
teams. The Company has also engaged independent  consultants to perform periodic
program reviews and assist in systems assessment and test plan development.
   The program  encompasses  the  following  phases:  an  inventory  of affected
technology  and  critical  third party  suppliers,  an  assessment  of Year 2000
readiness, resolution, unit and integrated testing and contingency planning. The
Company completed its worldwide inventory and assessment of all business systems
and supporting  infrastructure.  Required modifications are in progress and will
be  substantially  complete by year-end 1998. Tests are performed as software is
remediated, upgraded, or replaced. Integrated testing is expected to be complete
by mid-1999.
   PBCC relies on third  parties for many systems,  products and  services.  The
Company  could be  adversely  impacted  if third  parties do not make  necessary
changes to their own systems and products  successfully  and in a timely manner.
The Company has established a formal process to identify, assess and monitor the
Year 2000 readiness of critical third parties. Critical third parties with which
the Company  interacts  include,  among others,  customers and business partners
(supply chains, technology vendors and service providers);  the global financial
market   infrastructure   (payment  and  clearing  systems);   and  the  utility
infrastructure   (power,   transportation,   telecommunications)  on  which  all
corporations  rely.  However,  the Company is unable to predict  with  certainty
whether such third parties will be able to address their Year 2000 problems on a
timely basis.
   PBCC estimates the total cost of the worldwide program from inception in 1997
through the Year 2000 to be approximately $3 million,  of which approximately $2
million is expected to be incurred through December 31, 1998. These costs, which
are funded through the Company's  cash flows,  include both internal labor costs
as well as consulting and other external costs.  These costs are incorporated in
the Company's budgets and current forecasts and are being expensed as incurred.
   The  failure to  correct a  material  Year 2000  problem  could  result in an
interruption  in,  or a  failure  of,  certain  normal  business  activities  or
operations.  Such failures could  materially and adversely  affect the Company's
results of  operations,  liquidity and financial  condition.  Due to the general
uncertainty  inherent  in  the  Year  2000  problem,   resulting  in  part  from
uncertainty  about the Year 2000 readiness of third  parties,  PBCC is unable to
determine at this time whether the  consequences of Year 2000 failures will have
a  material  impact  on  its  results  of  operations,  liquidity  or  financial
condition. However, the Company continues to evaluate its Year 2000 risks and is
developing  contingency  plans to mitigate the impact of any potential Year 2000
disruptions. PBCC expects to complete contingency plans by the second quarter of
1999.



--------------------------------------------------------------------------------
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;
the  success of the  Company at managing  customer  credit  risk and  associated
collection and asset management efforts;  and the impact of the Year 2000 issue,
including  the  effect of third  parties'  inability  to  address  the Year 2000
problem as well as the Company's own readiness.


<PAGE>



                                  Page 12 of 15
                           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 from Continuing        See Exhibit (i)
                             Operations to Fixed Charges                           on page 14
            (27)           Financial Data Schedule                                 See Exhibit (ii)
                                                                                   on page 15

                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. During  October and November,  1998,  reports were filed under Items 5 and 2,
respectively,  of Form 8-K,  relating to the sale of the  operations of Colonial
Pacific Leasing Corporation.


</TABLE>





<PAGE>



                                  Page 13 of 15
                                    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/ NANCY E. COOPER
                                                    ----------------------
                                                        Nancy E. Cooper
                                                  Vice President, Finance and
                                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

Dated:  November 16, 1998



<PAGE>



                                  Page 14 of 15
                                   Exhibit (i)
  Computation of Ratio of Earnings from Continuing Operations to Fixed Charges

<TABLE>




                                            Three Months Ended September 30,        Nine Months Ended September 30,
                                           ------------------------------           ----------------------------
                                                 1998                1997                   1998            1997
                                                 ----                ----                   ----            ----

Income from continuing operations
<S>                                          <C>                 <C>                   <C>            <C>       
  before income taxes...................     $ 73,219            $ 59,562              $ 204,847      $  179,958
                                              -------             -------               --------        --------
Fixed charges:
  Interest on debt......................       28,542              39,081                 88,245         118,210
  One third rent expense................          247                 446                    701           1,102
                                              -------             -------               --------        --------

Total fixed charges.....................       28,789              39,527                 88,946         119,312
                                              -------             -------               --------        --------

Earnings from continuing operations
  before fixed charges..................   $  102,008          $   99,089              $ 293,793       $ 299,270
                                              =======             =======               ========        ========

Ratio of earnings from continuing
  operations to fixed charges (1).......        3.54X               2.51X                  3.30X           2.51X
                                              =======             =======               ========         =======


</TABLE>




(1)  The ratio of earnings from  continuing  operations to fixed charges is
     computed by dividing  earnings  from  continuing  operations  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.


<PAGE>