An affinity card is a type of credit card issued by a bank and a charitable organization whose logo appears on the card. Each time the card is used, a percentage of the transaction is donated to the organization.

Breaking Down Affinity Card

Although affinity cards may seem like a collective win for the bank, organization, and cardholder, there are negatives as well. Affinity cards offer fewer of the perks (such as warranty coverage) other cards do; they sometimes charge higher fees, and the amount donated to the charity (which is not tax-deductible to the cardholder) is very small – often about .05%. Nevertheless, affinity cards are popular with consumers who like the idea of giving as they spend.

Note that affinity cards are distinguished from co-branded credit cards, which are issued by the bank and business (e.g., retailer, airline) and offer personal benefits (e.g., discounts, points) to the cardholder.

Ways Affinity Cards Benefit the Groups That Offer Them

Organizations may find affinity cards appealing as they offer a way to develop a passive revenue stream, though the overall funding it generates may be small. Given the limited scope and amount of money that affinity cards can accrue for organizations, this is an auxiliary means of supporting its operations. Typically, affinity cards have no impact on merchants when they are used to make purchases. The fees and donations usually do not reduce the payment made in the transaction.

Banks that issue affinity cards may offer a selection of organizations the cardholder can choose support. Organizations might reach out to their members or donors to inform them that affinity cards are available as a way to augment their support and participation. This could include fraternal organizations, nonprofit sports clubs, and academic groups. For instance, graduates of a university might be offered an affinity card for their respective alumni association. The organization might specify how it intends to use the nominal donations that are collected from each purchase. A nature-oriented organization, for example, may pledge to plant a new tree each year the card remains active.

New signups for affinity cards may give the organization a one-time, flat-rate payment that could be $1 or more in addition to the small percentage donated every time a purchase is made.

Though the benefits offered through affinity cards might not be equal to other programs, the cardholder could receive cashback rather than points when making purchases with the card. For some cardholders, the opportunity to personalize a credit card with a logo from a cause or group they support is an incentive in and of itself.