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 hard to carve out room in our budgets for charitable giving. Those who are looking to find ways to give back may appreciate how easy affinity cards make it to donate to charities and nonprofits.

Affinity cards — which are often called 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 that is linked to a charity or nonprofit. These cards often bear the name and logo of their linked organization. When a financial institution partners with such an organization to create an affinity credit card, the financial institution usually offers some monetary incentive to the organization — a donation for every credit card opened or charge made, for example.

Often, when a bank offers affinity cards, they give the cardholder the option to choose between a selection of different nonprofit organizations that they can support. Affinity cards can help support charities, academic groups, nonprofit sports clubs and fraternal 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 of them. But while co-branded credit cards are usually issued by for-profit institutions, affinity credit cards, with some exceptions, are usually partnered with nonprofits. The nonprofit can specify how it plans to use the donations it gets from the affinity card, which can make signing up for one of these credit cards more motivating as you know what the donations are going toward.

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

The partnering organization usually gets a one-time, flat-rate donation whenever a new credit card account is opened, and it may also earn a percentage of purchases made by the new account holder. Although such donations are relatively small, the partnering organization may also benefit from increased visibility and awareness for its causes.

Occasionally, the financial institution will charge 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 with which they can do business.

Popular affinity card examples

One popular affinity card is the Susan G. Komen® Customized Cash Rewards Visa® credit card from Bank of America*. The charitable organization — 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 charitable organization. Bank of America donates $3 per year to Susan G. Komen for most account renewals, $3 for each new cardholder and 0.08 percent of all retail purchases (minus returns) made within 90 days of opening the account.

Another example is the newer Aspiration Zero credit card*, which is partnered with Mastercard and plants a tree every time a cardholder makes a purchase — plus another tree if the cardholder rounds that 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 isn’t the right fit for all consumers, and there are some downsides to this type of credit card. To better understand if an affinity card is a good fit for you, let’s examine the advantages and disadvantages.

Pros

• Charities gain 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 revenue, which shoulders some of the fundraising burden charitable organizations face every day.
• Merchants aren’t affected: The financial institution that issues the affinity card is the one to donate money, so you don’t have to worry about taking money away from a small business when making a purchase with your affinity card.
• Ongoing donations: Look for an affinity card that gives an initial sign-up bonus and ongoing donations for each purchase you make with your credit card, that way you know your transactions are helping support the charity on an ongoing basis.
• Cash back and rewards points: Some affinity credit cards offer typical credit card perks like cash back, airline miles and other forms of rewards in addition to donating money to charity.
• Introductory offers: Some affinity cards also come with tempting introductory offers like low introductory interest rates.
• More visibility for the charity: Many charities appreciate the small donations they get from affinity cards, but they also participate in these programs to help spread more visibility about their work.
• Passive giving: Knowing you’re donating money to a cause close to your heart by using your affinity card can make it easier to support a charity you care about while also not harming your budget.

Cons

• Small donations: Some affinity credit cards only come with an initial sign-up bonus of as little as $1. Even the affinity cards that give money for every purchase made tend to be for a very small amount (about .05 percent), so they don’t raise that much money for charities unless a lot of people use these credit cards.
• Not tax deductible: Since the cardholder isn’t the one directly making a donation, they can’t deduct these donations from their income taxes.
• Fewer perks: While affinity cards can come with cardholder perks, they do tend to come with less valuable rewards than other credit cards.
• Risk of cancellation: If the financial institution issuing the affinity card and the charity choose to cancel their partnership, then you risk having your card canceled and losing any rewards you were able to accumulate. You also will lose the ability to use the credit card, which can be frustrating if you use the affinity card to set up recurring purchases such as subscription services or bills.

The bottom line

Affinity cards have unique advantages and disadvantages like any other type of credit card. The main perk of an affinity credit card is that it can help raise money for a charitable cause. That said, the cardholder rewards are often less lucrative. You may be better off using a normal credit card to earn cash back rewards and then using that cash to make a direct donation to a charity — which will make it possible to get a tax deduction.

When shopping the best credit cards for charitable donations, look at the fees, rewards offerings and interest rates each card offers carefully. That way, you can determine which card is the best fit for your goals.

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