What is an Affinity Credit Card?

In our busy lives, it’s easy to forget to give back. And with prices rising all around us, it can be difficult to carve out room in our budgets for charitable giving. Those who are looking for ways to give back can appreciate how easily affinity cards make donating to charities and non-profit organizations.

Affinity cards, often referred to as charity credit cards, are a type of credit card that donates money to a charity when you first open the credit card, or donates a very small percentage of each transaction you make to a charity.

Let’s take a closer look at what affinity cards are, how this type of credit card works, and what the pros and cons of this type of card are.

What is an Affinity Card?

An affinity credit card is a type of credit card linked to a charity or non-profit organization. These cards often carry the name and logo of the related organization. When a financial institution partners with such an organization to create an affinity credit card, the financial institution usually offers some sort of monetary incentive to the organization, such as a donation for each credit card opened or charged .

Often, when a bank offers affinity cards, they give the cardholder the option to choose from a selection of different non-profit organizations they can support. Affinity cards can help support charities, academic groups, non-profit sports clubs, and fraternity organizations.

How affinity cards work

Affinity credit cards are similar to co-branded credit cards in that two organizations, a financial institution and a brand, come together to issue a credit card that benefits both. But while co-branded credit cards are usually issued by for-profit institutions, affinity credit cards, with some exceptions, are usually associated with non-profit organizations. The nonprofit can specify how it intends to use the donations it receives from the affinity card, which can make signing up for one of these credit cards more motivating since you know what the donations are going to.

For example, affinity cards that support the alumni association of a non-profit university are quite common. A college alumni club may decide that any donations go toward funding scholarships or planting trees on campus.

The partner organization usually receives a one-time lump sum donation each time a new credit card account is opened and can also earn a percentage of purchases made by the new account holder. While these donations are relatively small, the partner organization can also benefit from greater visibility and awareness for its causes.

Occasionally, the financial institution will bill the affinity organization for its marketing costs or ask for some of its member data to help acquire customers for itself. However, many financial institutions are now partnering with nonprofits to issue affinity credit cards for free, increasing the number of smaller nonprofits they can do business with.

Popular examples of affinity cards

A popular affinity card is the Susan G. Komen® Customized Cash Rewards Visa® from Bank of America*. The charity – Susan G. Komen for the Cure – has partnered with financial institutions Bank of America and Visa to issue a credit card that offers both rewards to the cardholder and donations to the charity. Bank of America donates $3 annually to Susan G. Komen for most account renewals, $3 for every new cardholder, and 0.08% of all retail purchases (minus returns) made within 90 days from account opening.

Another example is the new Aspiration Zero* credit card, which partners with Mastercard and plants a tree every time a cardholder makes a purchase, plus another tree if the cardholder rounds the purchase up to the next dollar.

Pros and cons of affinity cards

An affinity card may seem like an objectively good thing at first glance, but it is not suitable for all consumers and there are some downsides to this type of credit card. To better understand if an affinity card is right for you, let’s look at the advantages and disadvantages.

Professionals

  • Charities get a passive revenue stream: The whole point of an affinity card is to help give back to a cause that matters to you. They tend to generate a small amount of passive income, which takes care of some of the fundraising burdens charities face every day.
  • Traders are not interested: The financial institution issuing your affinity card is the one giving away money, so you don’t have to worry about taking money away from a small business when you make a purchase with your affinity card.
  • Donations in progressLook for an affinity card that offers an initial sign-up bonus and ongoing donations for every purchase you make with your credit card—that way you’ll know your transactions help support the charity on an ongoing basis.
  • Refund and reward points: Some affinity credit cards offer typical credit card benefits such as cash back, airline miles and other forms of rewards in addition to donating money to charity.
  • Launch offers: Some affinity cards also come with enticing introductory offers such as low introductory interest rates.
  • More visibility for charity: Many charities appreciate the small donations they receive from affinity cards, but they also participate in these programs to help spread more exposure about the work they do.
  • Passive giving: Knowing you’re donating money to a cause you care about using your affinity card can make it easier to support a charity you care about without hurting your budget.

Versus

  • Small donations: Some affinity credit cards only come with an initial sign-up bonus of just $1. Even affinity cards that give cash for every purchase you make tend to be for a very small amount (about 0.05 percent), so they don’t raise that much money for charity unless a lot of people use these credit cards.
  • Not tax deductible: Since the cardholder is not the one making a direct donation, he cannot deduct these donations from income taxes.
  • Less benefits: While affinity cards may come with cardholder benefits, they tend to have less valuable rewards than other credit cards.
  • Risk of cancellation: If the financial institution issuing your affinity card and the charity choose to cancel their partnership, then you risk canceling your card and losing any rewards you may have accumulated. You’ll also lose the ability to use your credit card, which can be frustrating if you use your affinity card to set up recurring purchases like subscription services or bills.

The bottom line

Affinity cards have unique advantages and disadvantages like any other type of credit card. The main benefit of an affinity credit card is that they can help raise money for a charitable cause. That said, cardholder rewards are often less lucrative. It might be best to use a regular credit card to earn cash rewards and then use that money to make a direct donation to a charity, which will make it possible for you to get a tax break.

When shopping for the best charitable giving credit cards, look closely at the fees, reward offers, and interest rates each card offers. This way, you can determine which card best suits your goals.

*Bank of America Susan G. Komen Customized Cash Rewards Visa credit card and Aspiration Zero card information was independently collected by Bankrate.com. Your card details have not been reviewed or approved by your card issuer.

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