Facing greater competition for holiday spending dollars, credit card companies are unwrapping big end-of-year promotions backed by months of consumer research.

The companies hope the campaigns will prompt consumers to select their brands when buying holiday trappings.

Only the largest credit card companies have the scale and budget for successful national promotions, according to industry experts. Others may find themselves out in the cold.

Probably three out of four card issuers are not planning fourth-quarter promotions, said Russ Schoper, president of Business Developments International in Alpharetta, Ga.

Experts say those who make the promotional effort get a good return.

"If you can get one incremental transaction (per customer) across your active card base, the net result to your bottom line is staggering," Mr. Schoper said.

But industry analysts say retailers and credit card companies must be careful not to be seen as encouraging people to blow their budgets.

"This is the year to promote the card as an instrument of saving and budget management, not as an instrument of spending," said George Rosenbaum, chief executive officer of Leo J. Shapiro & Associates, a Chicago market research firm.

In a recent survey, Mr. Rosenbaum said, his firm found that people expect to spend the same amount this holiday season as they did last year and they "don't want to screw up their prosperity by going into debt."

First USA, the Bank One Corp. subsidiary, offers to cover the mailing costs of its Visa and MasterCard cardholders when they order from any of 16 catalogues through yearend.

Using the slogan, "the card that ships for free," First USA is working with such direct mailers as Company Store, Harold's, J.C. Penney, and Omaha Steaks.

This promotion should get a good response, Mr. Rosenbaum said, because "the card becomes an instrument of convenience and savings."

First USA did a national survey before planning the promotion. Results showed that 88% of Americans would shop more by catalogue if shipping and handling were free.

"We're constantly striving to identify and meet the needs of our card members," said Carter Warren, executive vice president of marketing at First USA, "and this is just one example of First USA simplifying things for them."

Visa U.S.A. has designed a holiday giveaway of its own, described as a "multimillion-dollar fourth-quarter promotion."

Dubbed "Magic Moments," the Visa program will randomly select a one- second time slot each day from Nov. 1 to Dec. 31. If the time on a shopper's sales receipt matches the designated moment-and the shopper paid with a Visa card-the cost of the purchase will be refunded on the next statement.

There are "more than 60 Visa Magic Moments in total," the card association says, and the odds of winning on any one day are one in 86,400.

Last week Visa began putting teaser ads on billboards in 10 markets. Slogans include: "There is magic left in the world. It's in your wallet."

Like First USA's program, Visa's is supported by focus group research. Consumers "responded with the highest level of interest Visa has ever documented," according to the association.

Half the cardholders questioned said they would use Visa more often during the promotion; nearly one-third said they would switch to Visa during Magic Moments.

"Magic Moments is based on research that tells us what will be meaningful and motivating to the consumer during the hectic holiday season," said Robert Pifke, senior vice president of marketing services for Visa.

"High cardholder interest in this promotion is destined to drive volume and card use," he said, "making Visa Magic Moments appealing to Visa member financial institutions and merchants looking for ways to build business during the holidays."

The sweepstakes aspect offers a significantly different look than last year, when Visa used its promotional dollars for charitable giving. In its "Read Me a Story" campaign, Visa gave money to a literacy program, Reading Is Fundamental, on the basis of the number of transactions made with Visa cards.

Visa continues to work with the charity, known as RIF. During the 1998- 99 academic year, Visa was to donate a minimum of $300,000 to RIF on the basis of transaction volume.

A Visa spokesman said the company rotates promotions about every two years to "keep things fresh."

Magic Moments has apparently spurred the interest of some card issuers and merchants, which have designed promotions to piggyback on Visa's.

For instance, if a Citibank Visa cardholder wins the Magic Moments contest, the bank will pay for up to $1,000 of the customer's purchases that day. Dell Computer is offering an extra "moment" every day during the promotion for purchases made on its Web site.

A separate holiday sweepstakes is being sponsored by MasterCard International-on the Internet. MasterCard is offering the chance to win a $100,000 on-line shopping spree.

During MasterCard's "Holiday Exclusives" program, the card association is also promoting discounts on Microsoft Corp. products and Gateway computers.

Noncomputer companies are represented as well: Shoppers paying with MasterCard at Sam Goody/MusicLand stores, Nature Company, Pizza Hut, and J.C. Penney will get various discounts. MasterCard said it chose these retailers because they are popular for gifts.

Also in conjunction with MasterCard, Penney is offering chances for a $1,000 shopping spree.

MasterCard is advertising its holiday program in Better Homes and Gardens, Family Circle, People, Time, and Martha Stewart Living magazines and will send more than 32 million statement inserts.

American Express Co. has already started one holiday promotion, and more are on the way. On Oct. 1, Wal-Mart shoppers using American Express cards began getting double Membership Rewards points.

The Wal-Mart offer, which expires at yearend, has been advertised in USA Today, People, and Better Homes and Gardens, as well as in billing statements and the company's "on hold" telephone message.

Mr. Rosenbaum of Leo J. Shapiro said the MasterCard and American Express promotions "are not really encouraging people to go into debt. They're competing for transactions that will go on anyway."

"Any promotions that tell consumers to buy more would be a mistake," Mr. Rosenbaum said.

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