February 2008
Give while you spend
Affinity credit cards can help you support worthy causes, but watch out for high rates and tiny donations
SEAL OF APPROVAL Your affinity card can support a cause that matters to you, be it seals, pandas, the environment, world hunger, or your alma
mater.
Americans donated nearly $300 billion in 2006 to charities and other nonprofit organizations. One of the simplest ways to
help your favorite worthy cause is to use an affinity credit card, which gives a small donation to a charitable group for
every purchase you make with it.
Donating that way seems to be painless because the issuing bank makes the contribution, not you. But depending on the card and your payment habits, you could feel a decidedly uncharitable pinch in the form of high finance charges.
How they work
Affinity cards are bank credit cards that are generally tied to charitable organizations, educational institutions, and nonprofit groups. Typically, the cards are emblazoned with the charity's logo and often a heartwarming image-a baby seal, Morris the Cat, a heron, the quad you trod as a university student, or even Elvis Presley. The cards are "mini billboards" for a cause, says Kelly Hlavinka, director of Colloquy, a loyalty research, consulting, and publishing group in Milford, Ohio.
Around since the 1980s, the cards have raised hundreds of millions of dollars for charitable organizations and nonprofits devoted to saving wetlands, rescuing abandoned animals, preserving wildlife around the globe, helping the homeless and impoverished, and finding a cure for cancer. If there's a cause that you're interested in supporting, there's probably an affinity card to go along with it.
Each time you use an affinity credit card, a small percentage of your purchase, cash advance, or balance transfer is paid to the organization it's tied to by the issuing bank. In rare cases, the donation amount is a full 1 percent, as with the World Wildlife Fund and the World Missions Visa cards. The amount is usually much less, about 0.25 to 0.50 percent, or 25 to 50 cents for every $100 charged.
Unlike other forms of charitable giving, you can't claim a year-end tax deduction for gifts made on your behalf through your affinity card. Nor can you ensure that the amount earmarked for the charity goes to the program you support rather than to overhead or administrative fees, although some charities specifically state that the donation goes directly to projects.
Watch the rates and terms
Affinity cards aren't necessarily charitable to the cardholder. Like any credit card, they can charge high interest rates and other fees, or carry unfavorable terms. Affinity cards that also pay rewards tend to have higher rates, so they might not be a good choice for people who don't pay off their balance in full each month.
"It pays to sit back and think rationally about them," says Curtis Arnold, founder of CardRatings.com, a Web site that publishes information about credit cards and rates them. "Why not get a tax deduction for your contribution?" Arnold, who says he's not a fan of charitable affinity cards, notes that the percentage that goes to charitable organizations is little changed since the cards were introduced in the 1980s.
And while you might get a warm, fuzzy feeling for supporting your pet cause, you should also examine the bank that's issuing the card and stands to profit when you use it. "Your credit card may have a picture of a whale on it, but the actions of the bank may not be what you support," says Joe Ridout, a spokesman for Consumer Action, a national advocacy organization in San Francisco.
Affinity cards are no longer the only game in town for charity-minded spenders. Many general-purpose and rewards credit cards now offer their holders the option of donating earned points or cash rewards to a number of charities. Examples include the relaunched BankAmericard and American Express cards.
Getting while giving
At the same time, a growing number of affinity cards now give users the option to earn reward points redeemable for cash or merchandise for themselves and still donate something to a charity they support. "Banks want to appeal to a new segment," Hlavinka says.
According to Jay Guskind, senior vice president and group head for partnership development at MasterCard Worldwide, interest in traditional affinity cards is on the decline. "People want to get something back, earn points, or get a tax deduction for their giving," he says.
As a result, many organizations are rethinking their affinity-card programs and, in some cases, revamping them. Ducks Unlimited, a Memphis-based conservation group, launched its first affinity card in 1986 and says it has raised nearly $70 million for the protection of wetlands and wildlife habitats where waterfowl live and breed. Most of the cardholders are hunters. "The name of the game is loyalty, and our members have had this card for a long time," says Philip Milburn, director of marketing and corporate relations for Ducks Unlimited.
As part of a trend toward increased flexibility, Ducks Unlimited launched its WorldPoints Platinum Plus Visa Card three years ago, touted as "the credit card that absolutely puts you first." In addition to donating a small percentage of the amount charged to the nonprofit, cardholders earn points that can also be turned over to Ducks Unlimited, or that they can redeem for cash or merchandise. The downside? "With a card that offers reward points and a charitable donation, slightly less goes back to conservation projects," Milburn says. Only 25 cents for every $100 of account balance now goes toward wetlands conservation, about half of what Ducks Unlimited's nonrewards affinity cards contribute. The new card is the only one marketed now. Ducks Unlimited says it has about 700,000 active members.
The National Audubon Society Rewards American Express card is another affinity card that pays rewards to cardholders. The issuer, Bank of America, has contributed more than $2.8 million to the nonprofit since the card was introduced three years ago. Cardholders earn one point for every dollar they spend and can choose among a number of redemption options, such as cash, merchandise, and travel.
Terry Macko, vice president of membership and partner marketing at the World Wildlife Fund, says cards that offer both points and a donation "send a confusing message and offer less to the charity." The World Wildlife Fund's affinity card has raised more than $10 million since 1995. "Holders of our card are more interested in giving back than in getting something for themselves," he says.
People who want an affinity card have an abundance of options to choose from. If you go for the Working Assets affinity card, you'll have some 50 progressive groups that you can support, including Amnesty International, Doctors Without Borders, Greenpeace, and Rock the Vote. Ten cents of every credit-card transaction goes to the organizations. Through its "Fueling the Future" program, a tree is planted for every tank of gas that's charged to the card, in addition to the 10-cent donation. Last year, Working Assets raised more than $4 million for selected nonprofits, according to its CEO, Laura Scher.
Elvis and education
Fans of Elvis Presley can apply for a card that offers both Graceland perks and grace periods. Users of the Elvis Visa Card, emblazoned with the King's image, get reduced rates on Elvis-themed merchandise and tours of Graceland, Presley's home in Memphis. For each purchase made with the card, the issuer makes a donation to the Elvis Presley Charitable Foundation, which provides support for homeless families and scholarships for performing-arts students, among other causes. However, the foundation would not specify the amount it receives.
Target shoppers who wish to make contributions toward education have two options. REDcard, Target's store card, has a high annual percentage rate, like many retailer charge cards. REDcard holders can have 1 percent of the amount charged in the store or at target.com donated to a kindergarten through high school of their choice as part of Target's "Take Charge of Education" program. The REDcard Visa credit card makes the same 1 percent contribution for Target purchases and a 0.5 percent contribution for amounts charged at other retailers-and it carries a lower interest rate. The program has raised more than $200 million for education, according to Target's Web site.
Newer affinity cards include the World Missions Visa, issued last year by Follieri Capital and Washington Mutual. One percent of net sales is donated to Catholic missions around the world. The American Water Works Association Visa Card, launched by Bank of America last year, offers points for cardholders and support for clean-water projects.
Competing causes
Affinity cards that benefit the environment have more competition than ever. Some recent entries in this category give users the option of donating earned points or rewards toward earth-friendly programs. One example is GE Money's Earth Rewards Platinum MasterCard, which lets users contribute their rebates toward projects aimed at reducing greenhouse gases. And Bank of America's recently launched Brighter Planet Visa card automatically donates "Earthsmart" points to renewable energy projects.
But Macko of the World Wildlife Fund hopes environment-minded consumers will consider supporting his organization's broader mandate. "Cards that reduce your carbon footprint are very specific and limited," he says. "Holders of the World Wildlife affinity card support more than 2,000 wildlife and conversation projects in 100 countries around the world."
With so many options available, consumers can choose the affinity card that best aligns with their individual needs and beliefs. Just don't let your passion for the cause blind you to what it'll cost you to use the card. "It's important, as with any card, to read the fine print," says Arnold of CardRatings.com.
Donating that way seems to be painless because the issuing bank makes the contribution, not you. But depending on the card and your payment habits, you could feel a decidedly uncharitable pinch in the form of high finance charges.
How they work
Affinity cards are bank credit cards that are generally tied to charitable organizations, educational institutions, and nonprofit groups. Typically, the cards are emblazoned with the charity's logo and often a heartwarming image-a baby seal, Morris the Cat, a heron, the quad you trod as a university student, or even Elvis Presley. The cards are "mini billboards" for a cause, says Kelly Hlavinka, director of Colloquy, a loyalty research, consulting, and publishing group in Milford, Ohio.
Around since the 1980s, the cards have raised hundreds of millions of dollars for charitable organizations and nonprofits devoted to saving wetlands, rescuing abandoned animals, preserving wildlife around the globe, helping the homeless and impoverished, and finding a cure for cancer. If there's a cause that you're interested in supporting, there's probably an affinity card to go along with it.
Each time you use an affinity credit card, a small percentage of your purchase, cash advance, or balance transfer is paid to the organization it's tied to by the issuing bank. In rare cases, the donation amount is a full 1 percent, as with the World Wildlife Fund and the World Missions Visa cards. The amount is usually much less, about 0.25 to 0.50 percent, or 25 to 50 cents for every $100 charged.
Unlike other forms of charitable giving, you can't claim a year-end tax deduction for gifts made on your behalf through your affinity card. Nor can you ensure that the amount earmarked for the charity goes to the program you support rather than to overhead or administrative fees, although some charities specifically state that the donation goes directly to projects.
Watch the rates and terms
Affinity cards aren't necessarily charitable to the cardholder. Like any credit card, they can charge high interest rates and other fees, or carry unfavorable terms. Affinity cards that also pay rewards tend to have higher rates, so they might not be a good choice for people who don't pay off their balance in full each month.
"It pays to sit back and think rationally about them," says Curtis Arnold, founder of CardRatings.com, a Web site that publishes information about credit cards and rates them. "Why not get a tax deduction for your contribution?" Arnold, who says he's not a fan of charitable affinity cards, notes that the percentage that goes to charitable organizations is little changed since the cards were introduced in the 1980s.
And while you might get a warm, fuzzy feeling for supporting your pet cause, you should also examine the bank that's issuing the card and stands to profit when you use it. "Your credit card may have a picture of a whale on it, but the actions of the bank may not be what you support," says Joe Ridout, a spokesman for Consumer Action, a national advocacy organization in San Francisco.
Affinity cards are no longer the only game in town for charity-minded spenders. Many general-purpose and rewards credit cards now offer their holders the option of donating earned points or cash rewards to a number of charities. Examples include the relaunched BankAmericard and American Express cards.
Getting while giving
At the same time, a growing number of affinity cards now give users the option to earn reward points redeemable for cash or merchandise for themselves and still donate something to a charity they support. "Banks want to appeal to a new segment," Hlavinka says.
According to Jay Guskind, senior vice president and group head for partnership development at MasterCard Worldwide, interest in traditional affinity cards is on the decline. "People want to get something back, earn points, or get a tax deduction for their giving," he says.
As a result, many organizations are rethinking their affinity-card programs and, in some cases, revamping them. Ducks Unlimited, a Memphis-based conservation group, launched its first affinity card in 1986 and says it has raised nearly $70 million for the protection of wetlands and wildlife habitats where waterfowl live and breed. Most of the cardholders are hunters. "The name of the game is loyalty, and our members have had this card for a long time," says Philip Milburn, director of marketing and corporate relations for Ducks Unlimited.
As part of a trend toward increased flexibility, Ducks Unlimited launched its WorldPoints Platinum Plus Visa Card three years ago, touted as "the credit card that absolutely puts you first." In addition to donating a small percentage of the amount charged to the nonprofit, cardholders earn points that can also be turned over to Ducks Unlimited, or that they can redeem for cash or merchandise. The downside? "With a card that offers reward points and a charitable donation, slightly less goes back to conservation projects," Milburn says. Only 25 cents for every $100 of account balance now goes toward wetlands conservation, about half of what Ducks Unlimited's nonrewards affinity cards contribute. The new card is the only one marketed now. Ducks Unlimited says it has about 700,000 active members.
The National Audubon Society Rewards American Express card is another affinity card that pays rewards to cardholders. The issuer, Bank of America, has contributed more than $2.8 million to the nonprofit since the card was introduced three years ago. Cardholders earn one point for every dollar they spend and can choose among a number of redemption options, such as cash, merchandise, and travel.
Terry Macko, vice president of membership and partner marketing at the World Wildlife Fund, says cards that offer both points and a donation "send a confusing message and offer less to the charity." The World Wildlife Fund's affinity card has raised more than $10 million since 1995. "Holders of our card are more interested in giving back than in getting something for themselves," he says.
People who want an affinity card have an abundance of options to choose from. If you go for the Working Assets affinity card, you'll have some 50 progressive groups that you can support, including Amnesty International, Doctors Without Borders, Greenpeace, and Rock the Vote. Ten cents of every credit-card transaction goes to the organizations. Through its "Fueling the Future" program, a tree is planted for every tank of gas that's charged to the card, in addition to the 10-cent donation. Last year, Working Assets raised more than $4 million for selected nonprofits, according to its CEO, Laura Scher.
Elvis and education
Fans of Elvis Presley can apply for a card that offers both Graceland perks and grace periods. Users of the Elvis Visa Card, emblazoned with the King's image, get reduced rates on Elvis-themed merchandise and tours of Graceland, Presley's home in Memphis. For each purchase made with the card, the issuer makes a donation to the Elvis Presley Charitable Foundation, which provides support for homeless families and scholarships for performing-arts students, among other causes. However, the foundation would not specify the amount it receives.
Target shoppers who wish to make contributions toward education have two options. REDcard, Target's store card, has a high annual percentage rate, like many retailer charge cards. REDcard holders can have 1 percent of the amount charged in the store or at target.com donated to a kindergarten through high school of their choice as part of Target's "Take Charge of Education" program. The REDcard Visa credit card makes the same 1 percent contribution for Target purchases and a 0.5 percent contribution for amounts charged at other retailers-and it carries a lower interest rate. The program has raised more than $200 million for education, according to Target's Web site.
Newer affinity cards include the World Missions Visa, issued last year by Follieri Capital and Washington Mutual. One percent of net sales is donated to Catholic missions around the world. The American Water Works Association Visa Card, launched by Bank of America last year, offers points for cardholders and support for clean-water projects.
Competing causes
Affinity cards that benefit the environment have more competition than ever. Some recent entries in this category give users the option of donating earned points or rewards toward earth-friendly programs. One example is GE Money's Earth Rewards Platinum MasterCard, which lets users contribute their rebates toward projects aimed at reducing greenhouse gases. And Bank of America's recently launched Brighter Planet Visa card automatically donates "Earthsmart" points to renewable energy projects.
But Macko of the World Wildlife Fund hopes environment-minded consumers will consider supporting his organization's broader mandate. "Cards that reduce your carbon footprint are very specific and limited," he says. "Holders of the World Wildlife affinity card support more than 2,000 wildlife and conversation projects in 100 countries around the world."
With so many options available, consumers can choose the affinity card that best aligns with their individual needs and beliefs. Just don't let your passion for the cause blind you to what it'll cost you to use the card. "It's important, as with any card, to read the fine print," says Arnold of CardRatings.com.
