Affinity cards are credit cards issued by charitable organizations, educational institutions, and non-profit groups for promoting an organization's brand and imagery.
Members or supporters who share an affinity for an organization or a cause are the users of affinity credit cards. Each time a cardholder uses an affinity card; he is not only advertising his affinity to an organization or a cause but also helps them generate funds.
For instance, an affinity credit card program will pay the brand owning organization a bonus for each new account and a percentage of every transaction charged to the card.
In most cases, an organisation will enter a revenue and profit-sharing venture with a credit card issuing bank or credit card issuers such as MasterCard or VISA. The venture generates funds for the organization by way of fees, charges and credit lent to affinity cardholders.
Most commercial and non-commercial organizations that have a huge database, sensing an opportunity have also started issuing affinity credit cards. In fact, retailers, shopping malls, airlines, colleges, associations, teams, and professional bodies depend on them for generating additional income. They are also used by commercial organizations to up-sell to customers and for cross marketing purposes. They offer affinity credit card users incentives to use the card.
Since the 1980’s, affinity credit cards have helped raise millions of dollars for charitable organizations. So much so, if there is cause an affinity card goes along with it. However, they are not the only ones for the charity-minded. Many general-purpose and rewards credit cards offer the option of donating earned points or cash rewards to a number of charities.
However, there is one major draw back in using affinity cards particularly for donating funds to charity. The income tax law does not provide the option of year-end tax deduction for gifts made through an affinity card. There is also no way to ensure that the amount earmarked for the charity goes to the program and not to overhead or administrative fees.
It is important to keep in mind that an affinity credit card is no different from a straightforward credit card. It charges the same high interest rates and fees. Therefore, a cardholder is better off by paying the balance in full every month.