Ask the man on the street, "Who issues the General Motors card?" and you're likely to get a "Who's buried in Grant's Tomb?" response -- if not a blank stare.

The right answer -- Household Bank -- is a name that "barely registers" in consumer surveys, says Bruce Brittain, the Atlanta-based credit card marketing analyst.

But card industry insiders certainly know about the bank owned by Household International, which has quietly become one of the five largest in the credit card business.

Card bankers also know Joseph Saunders, the former Continental Bank executive who has put the stamp of his personality, and reputation for industry leadership, on what is arguably the most influential credit card issuer in the country.

GM Talked to the Elite

While it was preparing to enter the credit card fray with a powerful rebate program that could help people buy cars, General Motors Corp. approached other members of the industry elite -- Citicorp, Banc One Corp., and Bank of New York Co.

But it was most impressed by Mr. Saunders' willingness to try something completely new, to work out a revenue-sharing agreement, and to let GM's identity overshadow Household's in what became the most massive credit card launch ever.

Household's competitors were reluctant to issue a card that would be identified solely with GM, said Ronald N. Zebeck, managing director of GM card. That was a problem because the automaker didn't want to "dilute" its own recognition by cluttering the front of the card with the name of a less-well-known bank partner.

Amenable to No-Fee Strategy

What's more, Mr. Saunders proved more amenable than the others to issuing a card with no annual fee, Mr. Zebeck recalled. And he was ready to commit the resources required to meet GM's ambitious growth goals.

"When I asked Joe what he would do if he has $3 to invest, he said $2 would go into credit cards and the other dollar would go into their banking business," Mr. Zebeck said. "That indicated how devoted he was to bringing value to the customer."

"We listened to what they had to say," Mr. Saunders said, recalling a video presentation Mr. Zebeck made to Household executives at their Salinas, Calif., headquarters in early 1992. "We ended up collectively buying into the vision that this was a potentially dynamite product."

All signs say their judgment was correct.

Largely thanks to the GM Card, which hit the market 11 months ago, Household Bank has surpassed AT&T Universal Card Services in credit card loans outstanding, to move into fifth place among bank card issuers.

Household credit card loans under management reached $7.3 billion, compared with the $7.2 billion AT&T has amassed since 1990, according to a midyear report released Wednesday by Ram Research Corp.

Consumers have run up $3.3 billion in balances on GM cards and cashed in rebates toward the purchase of some 45,000 GM cars, Mr. Zebeck said.

Analysts point out that Household's example was at least a part of the inspiration for Citicorp to issue a similar card with Ford Motor Co. The pressure to add more value to cards also prompted Chase Manhattan Corp., to upgrade its frequent-flyer program with British Airways and Wells Fargo & Co. to offer a card that gives a rebate covering mortgage-closing costs.

For Mr. Saunders, 47, the GM Card is only the latest in a series of credit card successes.

"Joe had a track record of being in a card business that had grown dramatically in a short period of time. And that's what Household wanted," said Stephen P. Topper, who was among the bankers Household hired to staff the unit under Mr. Saunders in 1985.

At Continental, Mr. Saunders had built the Town & Country card division into one of the largest in the nation, before the bank ran into unrelated troubles and sold the portfolio to Chemical Banking Corp., Mr. Topper said.

Household was so impressed, it continued to pursue Mr. Saunders even after he was hired for a brief stint at Bank of America, said Mr. Topper, who is currently senior vice president of direct mail at First Nationwide Bank in San Francisco.

At Household, Mr. Saunders did not disappoint.

A "heavy investment" in data management systems paid off by enabling the bank to target its cards to individual consumers, said Warren Wilcox, executive vice president of planning and development under Mr. Saunders.

"In retrospect, it turned out to be a little clairvoyant," said Mr. Wilcox, who recently announced that he would leave Household Bank to form a data services unit for Fair Isaac & Co.

"Right out of the gate, we were going as low as 16.9% for some people," he said, referring to an interest rate that was considered low at the time. "Some products had fees, some not, some had $10 fees and some had $20 fees. We had a lot of flavors of ice cream."

Buying Card Loan Portfolios

Household also built its market share by aggressively acquiring card loans from other issuers, Mr. Wilcox said. The bank added more than $2.5 billion in receivables in 20 different purchases, starting with the portfolio of Avco National Bank in 1987.

Mr. Wilcox said Mr. Saunders' management style came to the fore in negotiating those purchases, as he delegated all but the final sticking points to staff members.

At one point, Mr. Wilcox recalled, Mr. Saunders got on the phone at 3 a.m. to nail down a purchase from CoreStates Financial Corp. that involved a complex side deal with the investment bank Ranieri, Wilson & Co.

"He's got a strategic focus," Mr. Wilcox said of Mr. Saunders. "He can be tough and demanding one minute, sensitive the next. He has a superb sense of when to push people."

For his part, Mr. Saunders credits teamwork, saying, "You need to get a management team put together that buys into the notion that they are all focused on the same objective. You need to create a culture where everybody feels they're competing with other people, not with each other."

The GM Card was the largest in a series of products that Household has issued under strategic alliances with nonbank partners.

"People have been trying to add value to the cards for the past 10 to 12 years," Mr. Saunders said, referring to airline affinity cards and other promotions. Only a bank with the "horsepower" of a Citicorp has the ability to distinguish itself purely on the basis of quality service, the banker added.

For Household, the first such product was the Alliance Comp-u-Card, associated with a discount buying service, that was issued in a joint venture with CUC International of Stamford, Conn.

More recently, Household issued a card on behalf of Chicago-based Ameritech that offers a 10% discount on long-distance calls. That product was dwarfed by the GM Card, which has been issued to seven million people with five million accounts. But Ameritech's is a substantial success by almost any other measure, with 600,000 cards issued in a five-state region, and $300 million in loans outstanding.

Marketing Advantages

What's new in the GM card, he said, is "the notion of talking to other people and saying how your marketing objectives can be supplemented by associating with a credit card."

Although it is a major force in the credit card world, Household's parent has yet to reap the full rewards of Mr. Saunders' efforts.

Richard S. Goleniewski, who follows the $33 billion-asset Household International for Goldman, Sachs & Co., said credit cards is its fastest-growing asset category but will contribute only 50 cents to 75 cents of the projected $6 a share of earnings this year.

Mr. Goleniewski said the card unit's profitability remains burdened by star-up costs, and that the revenue sharing arrangement with GM may be cutting into its total yield. The unit is earning about 1% on assets, he said, which is good for a commercial bank but shy of the 1.87% average for a credit card issuer.

Some observers have warned that the rapid growth of the GM Card will be followed by a rise in delinquencies and chargeoffs as the accounts mature.

But according to Stuart A. Feldstein, of SMR Research Corp., which recently published a study of "high-value" cards like GM's, there are indications that credit quality will be better than average. Cardholders are seen as reluctant to default because they could lose their rebate points.

And it's clear that Mr. Saunders, who is among the contenders to assume the presidency of Household International left vacant following the recent death of Edwin Hoffman, has no intention of letting up.

Mr. Wilcox hints that there are some new initiatives coming that, if they won't rival the GM Card, will at least keep Household a step ahead of the rest of the industry.

And Mr. Goleniewski notes that with the Chesapeake, Va., processing unit that recently opened to service the GM Card, Household is operating at only about half of its capacity.

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