When Catherine Johnson pulls out her MasterCard and says ``That'll be a charge,'' the Massachusetts Cultural Alliance receives 5 cents of every dollar she spends. That nickel qualifies as a charitable donation. It is also a marketing strategy to streamline the way dollars come out of consumers' pockets.
Visa and MasterCard ``affinity cards'' bear the logos of airlines, clubs, schools, and other organizations, which, in most cases, receive small percentages of purchases made with the card.
The cards were developed in 1978 by Edward Shelton, executive vice-president of American Bankcard Services Inc., for the American Automobile Association. While spending on himself, Mr. Shelton reasoned, the consumer can help an organization for which he has an ``affinity.''
Since then, the motives behind the cards have become as varied as the logos. Public awareness, for example, is the primary interest of non-profit groups such as Mothers Against Drunk Driving.
``We want people to look at the card and think `Don't drink and drive,''' a spokeswoman says.
The Massachusetts Cultural Alliance's MasterCard is aimed at promoting participation in the cultural community, says Pamela Watson, director of development.
``People don't want just another credit card,'' she says. ``It is something you're interested in.''
A few groups remain dedicated to raising money for social and environmental services. Working Assets, a money market mutual fund with more than $100 million in assets, issued its card in 1986 hoping to target ``practical idealists.'' (See story at right.)
The educational community is catching onto the idea, too. Universities are using credit cards to supplement annual giving and to boost school spirit.
In just over a year, more than 4,000 Boston University Visas, complete with a four-color campus skyline photo, have been issued to alumni, faculty, and staff.
Although no exact figures are available, Paul Curnutte, director of annual giving at Boston University, says the response to the affinity cards has been overwhelmingly favorable.
Peggy Byington of First Florida Bank of Tallahassee says her bank, in a contract with a business-education partnership, offers a special Visa on which between 0.75 and 1 percent of every dollar spent goes to the nearby Volusia County schools.
Many companies, however, are looking more to the business end of things and expect affinity cards to help increase market share.
The airlines provide a case in point. Because the banks pay to use frequent-flyer mailing lists for card solicitation, several airlines, such as Continental, Texas Air, and American Airlines can now dangle more bonus mileage and other treats before passengers who use their card. Piedmont even offers two different kinds of affinity cards hoping to create some sense of loyalty in the ongoing air-war confusion.
While many groups are interested in getting in on the affinity card scene, the banks are doing most of the footwork.
``We were approached by the bank,'' says Pamela Watson, director of development for the Massachusetts Cultural Alliance.
The banks buy an organization's mailing lists, do the advertising and accounting, and as no small reward, gain access to pools of credit-worthy, interest-paying customers.
``Many affinity group members have above average credit ratings,'' a spokesman for MasterCard says. ``And they often feel a special responsibility to meet the financial obligation of the affinity card before others.''
Strategists also say solicitation for all affinity cards has proven less expensive and more successful than traditional marketing approaches. According to David Brancoli, spokesman for Visa USA Inc., the response rate for the affinity Visas ranges from 6 to 20 percent, while general solicitation yields only 1 to 3 percent.
Some banks waive the annual fee or offer lower interest rates. But most rates, once hailed as a bargain, are now about the same as those of many other credit cards.
The Boston University card, for example, charges 16 percent a year. The American Airlines card has an annual fee of $50 with an interest rate of 17.8 percent, and Continental and Eastern cards have a $36 a year fee with an 18.95 percent interest rate.
The competition is tough, but spokesmen at the credit-card organizations say they still leave the marketing to the banks.
``We're not pushing it, not Visa, it's the banks,'' says Mr. Brancoli. But Visa certainly is not resisting the move.
Of the 150 million Visa card holders around the world, ``there are between 5 and 8 million people with affinity Visa cards,'' he says, ``and there are another 200 programs under development.''
MasterCard boasts equal success with 6 million affinity card holders and 335 participating groups. ``It is one of the fastest growing market segments in the bank card industry today,'' a MasterCard report says.
While the affinity idea appeals to many, the bargain offered on the card may be even more attractive.
As one fund-raiser explains, ``I would choose the card, not so much for my feelings for the group it helps, but for what they can offer me.''
He promotes one affinity card at work and carries another in his wallet. The one in his wallet has a better interest rate.