What is an affinity credit card?

In our busy lives, it’s easy to forget to give something back. And with prices are increasing All around us it can be difficult to make room in our budgets for charitable donations. Those looking for ways to give back will appreciate how easy affinity cards make it to donate to charities and nonprofits.

Affinity cards — often referred to as charity credit cards — are a type of credit card that donate money to a charity when you first open the credit card, or donate a very small percentage of every 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 the pros and cons of this type of card.

What is an affinity card?

An affinity credit card is a type of credit card associated with a charity or nonprofit organization. These cards often bear the name and logo of their affiliated organization. When a financial institution works with such an organization to create an affinity credit card, the financial institution typically offers the organization a monetary incentive — such as a donation for each credit card or charge opened.

When a bank offers affinity cards, they often give the cardholder the option to choose from a selection of different charities to support. Affinity cards can help support charities, academic groups, nonprofit sports clubs, and fraternities.

How affinity cards work

Affinity credit cards are similar Co-Branded Credit Cards 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 typically issued by for-profit institutions, affinity credit cards are typically partnered with nonprofits, with some exceptions. The nonprofit can indicate how they want to use the donations they receive from the affinity card, which can make signing up for one of these credit cards more motivating because you know what the donations are going to be used for.

For example, affinity cards supporting a nonprofit university’s alumni association are fairly common. A university alumni club can decide that any donation will go towards funding scholarships or planting trees on campus.

The partner organization usually receives a one-time lump sum donation when a new credit card account is opened, and they may also receive a percentage of the new account holder’s purchases. Although such donations are relatively small, the partner organization can also benefit from increased visibility and awareness of their causes.

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

Examples of popular affinity cards

A popular affinity card is the Bank of America* Susan G. Komen® Customized Cash Rewards Visa® credit card. 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 cardholder rewards and donations to the charity. Bank of America donates to Susan G. Komen $3 annually for most account renewals, $3 for each new cardholder, and 0.08 percent of all retail purchases (net of returns) made within 90 days of account opening.

Another example is the recent one Aspiration Zero credit card*, which partners with Mastercard and plants a tree every time a cardholder makes a purchase – plus another tree when the cardholder rounds that purchase up to the nearest dollar.

Pros and cons of affinity cards

An affinity card might seem like an objectively good thing at first glance, but it’s 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 explore the pros and cons.

advantages

  • Charities get a passive revenue stream: The whole purpose of an affinity card is to give something back to a cause you care about. They tend to generate a small amount of passive income that supports some of the fundraising burdens that nonprofits face on a daily basis.
  • Dealers are not affected: The financial institution that issues the affinity card donates money, so you don’t have to worry about taking money away from a small business when you shop with your affinity card.
  • Ongoing donations: Look for an affinity card that offers a sign-up bonus and ongoing donations for every purchase you make with your credit card, so you know your transactions are continually supporting the charity.
  • Cashback and reward points: Some affinity credit cards offer typical credit card benefits such as cash backAirline miles and other types of awards in addition to monetary donations to charity.
  • Introductory Offers: Some affinity cards also have enticing introductory offers such as low introductory interest rates.
  • More visibility for the club: Many charities appreciate the small donations they receive from affinity cards, but they also participate in these programs to give their work more visibility.
  • passive giving: Knowing you’re donating money to a cause you care about by using your affinity card can make it easier to support a charity you care about without breaking your budget.

Disadvantages

  • Small donations: Some affinity credit cards only offer an initial sign-up bonus of as little as $1. Even the affinity cards that give money for every purchase made are usually for a very small amount (about 0.05 percent) so they don’t raise that much money for charities unless a lot of people use those credit cards.
  • Not tax deductible: Because the cardholder is not the one who donates directly, they cannot deduct these donations from their income tax.
  • Less perks: While affinity cards may come with cardholder benefits, they typically come with less valuable rewards than other credit cards.
  • cancellation risk: If the financial institution issuing the affinity card and the charity end their partnership, you risk having your card canceled and losing any rewards you were able to collect. You also lose the ability to use the credit card, which can be frustrating when using the affinity card to set up recurring purchases like subscription services or bills.

The final result

Affinity cards have unique advantages and disadvantages like any other type of credit card. The main advantage of an affinity credit card is that it can help raise money for a good cause. However, the cardholder rewards are often less lucrative. It might be better to use a regular credit card to get cashback rewards, and then use that money to donate directly to a charity — allowing for a tax deduction.

When shopping the best credit cards for charitable donations, take a close look at each card’s fees, rewards, and interest rates. This allows you to determine which map best suits your goals.

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

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