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South Orange, N.J., a bucolic suburb of 17,000, is poised to join the ranks of affinity credit-card issuers. That's a rare, and perhaps unique, position for a municipality. Village President Bill Calabrese calculates that, if 2,500 residents use the South Orange MasterCard, the town could rake in $75,000 to $150,000 annually--a decent addition to its $16 million 1993-94 budget. The extra money could hold down property taxes, rising at a 5%-per-year clip, and help its downtown renovation.
With an affinity card, an organization gets a aut of the proceeds every time its members make a charge. The South Orange card, which Maryland's Chevy Chase Bank is expected to issue, has an 11.9% rate.
Will it work? Robert McKinley, who tracks the card industry for RAM Research of Frederick, Md., says many affinity cards flop. The Elvis Foundation dropped its card in 1991 after three years. Too many members didn't pay their bills. Calabrese thinks his citizens are better credit risks.