You may have seen credit cards that are co-branded with a sports team or a non-profit organization. These are called affinity credit cards––a type of credit card where a credit card issuer has partnered with an organization, often a non-profit organization. People choose an affinity credit card to show their loyalty to the organization or because using the credit card helps the organization. The partnership between the credit card issuer and the organization helps to market the credit card to reach more customers, especially when the organization has a large audience.
Sports team, colleges and universities, professional organizations, and nonprofit organizations often have affinity credit cards. With an affinity credit card, the organization’s name is usually included in the name of the credit card and the logo and brand colors are on the face of the physical credit card. The Susan G. Komen credit card, which is issued by Bank of America, is one of the most well-known affinity credit cards and features the pink ribbon that has become synonymous with breast cancer awareness.
How Affinity Credit Cards Work
Affinity credit cards help generate revenue, build loyalty, and spread the organization’s message. Whether your purchases actually make an impact on the organization depends on the agreement between the organization and the credit card issuer.
For example, the Florida College receives 1 percent of the total net volume of retail purchase made on the Florida College Rewards Platinum Visa Credit Card from Suncoast Credit Union. The college uses the funds to pay for student scholarships.
The credit card agreement will tell you how much the affiliate organization will receive from the credit card issuer. Make sure the credit card actually benefits the organization pictured on the front of the credit card. Partnering with a non-profit organization isn’t just about being altruistic. Credit card issuers themselves make up to 3 percent in processing fees on each credit card purchase.
Affinity credit cards operate just like any other credit card. A credit card issuer makes a certain amount of credit available to you based on the credit card and your creditworthiness. Then, you’re responsible for making at least the minimum payment on any balance you charge on your credit card. Payments are made to the credit card issuer just like you would with any other credit card.
When you’re choosing an affinity credit card, you should consider many of the same factors as any other credit card. How much is the annual fee? What’s the interest rate? What are the rewards on the credit card? Does it charge a foreign transaction fee?
On top of the credit card features, you should also look into the amount of money the organization receives for credit card purchases. Don’t assume a credit card is a good deal for you just because it’s associated with an organization you support.
Affinity credit cards tend to carry higher interest rates than other credit cards. You should pay your balance in full each month to avoid the extra interest expense, especially if you hope to earn rewards on your credit card purchases.
Affinity credit cards may offer a rewards program to encourage cardholders to use the credit card. The rewards program may be an incentive to use your credit card, but may not be as lucrative as other types of rewards credit cards. You might also find affinity credit cards that offer a signup bonus or introductory interest rates on balances transfers or purchases.
Charitable Giving Alternatives
Of course, an affinity credit card isn’t the only way you can contribute to an organization whose cause you can support. You can donate directly to the organization based on your budget and annual giving goals. In some cases, direct donations may make a bigger and more immediate impact than proceeds from an affinity credit card. Charitable donations that you give directly to qualified non-profit organizations may also qualify for a tax deduction where your affinity credit card purchases do not.
Risks of Using an Affinity Credit Card
There are some risks with getting an affinity credit card. If credit card issuers and affiliate organizations choose to end their partnership, your credit card may also be canceled. In that case, you could lose any rewards you’ve accumulated as well as the ability to make new purchases on the credit card. You’ll typically be allowed to pay off your balance under the previous terms.