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Credit cards give cash back to cities and non-profit groups

With the help of a local bank, several Nebraska towns are sponsoring their own credit cards. Instead of rewarding cash back or frequent flier miles to the card user, the cards generate income for the towns' coffers.

Hastings State Bank manages the accounts. The cards have an introductory 6.9 percent annual percentage rate that increases to 10 percent over prime after six months. Towns that brand the cards receive 1 percent of total purchases made on the cards. Whether a card's balance is paid every month or not, the bank still pays out the 1 percent. If marketed aggressively, this can add up quickly. More than 3,000 people currently carry Hasting's Hometown Pride cards, which feature an image of the city's Fisher Fountain illuminated at night. The cards generate $30,000 a year in income for the town.

Non-profit groups have embraced the program as well. Credit cards for Saint Michael's and Saint Cecilia's Catholic schools in Hastings have raised between $18,000 and $20,000 per year to help pay teachers' salaries. "The schools have focused on marketing their cards to alumni. Their success was a driving force in the growth of the program," said Kim Arlt, Hastings State Bank's credit card manager.

Other schools followed suit. Hastings College and boosters for Hastings-based Adams Central Public Schools soon made requests for cards.

Word about the bank's special offer quickly spread to other groups across the state.

Private schools in more than a dozen communities use the bank's program, and there are plans to start offering cards for at least one Catholic school in Lincoln.

Hastings State Bank currently handles credit card services for 22 nonprofit groups in the state at no cost. It designs and facilitates third-party production of the cards, provides card applications, and mails a check every three months to the sponsoring groups based on the amount of purchases made on the cards.

"In 1996, one of our officers wanted to help out the city of Hastings, which was going through some budget cuts," said Arlt. "He developed the idea of offering these credit cards that came with pictures of local landmarks. One percent of every purchase made with these cards would go back to the city. It just bloomed from there."

The neighboring town of Franklin funds its economic development program solely with the $1,000 per year generated by its Best of The Good Life cards.

"Everybody is looking for new dollars and there are only so many money-making things you can do - soup suppers and style shows, auctions or whatever," said Richard McNiff, the Franklin Chamber of Commerce's chairman. "When I heard about this it seemed like another good way to bring in a few dollars."

Other groups with cards include the Nebraska Firefighters Museum and Hall of Fame, the Holdrege Chamber of Commerce and York College.

The First National Bank of Omaha also facilitates cards for public entities but these cards reward the user more heavily than the issuer.

The Nebraska Game and Parks Commission and the Omaha Public Power District recently started offering cards through First National Bank of Omaha. These cards allow their holders to earn points that can be redeemed. OPPD card-holders earn discounts on their electric bills while Game and Parks card-holders earn free park stickers, subscriptions to Nebraskaland magazine, or hunting or fishing permits.

Points-earning cards have had success but do not generate as much income for their sponsors. The Game and Parks Commission gets one-quarter of 1 percent from each purchase made with its cards. Butch Ison, the agency's assistant director, said the revenue from the cards has been minimal but better than nothing.

"People here go to other towns and use their credit cards and buy shoes. That's understandable since we don't have a shoe store," said McNiff of Franklin. "At least this way we bring at least 1 percent ofthat outgoing traffic back. The alternative is zero percent."

Copyright NFR Communications Inc Jul 1-Jul 14, 2003
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