Spend for the cause with affinity cards |
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Read the fine print of any affinity program not only to see if there are recurring annual fees just for the privilege of holding the card, but also, what the fees are if you pay late, go over your credit limit or break some other rule. Be sure to read your statement carefully and any mailings that come from the issuer once you sign on, and be alert for extra and new fees.
"All banks note that they reserve the right to change the terms at any time for any reason, so even if there are no fees when you sign on, that could change," says Amanda Walker, senior project editor for Consumer Reports' Money Adviser, a personal-finance newsletter.
3. How does the interest rate compare to other cards?
According to Levitt, interest rates on balances, balance transfers and cash advances are another issue. While some affinity card issuers advertise rates that are only available to those with the best credit and impose higher rates on consumers who don't have sterling credit, others have terms that apply for everyone who qualifies for a card. So when you apply, you should make sure your rates are as advertised, or take your business elsewhere.
Compare rates to those of other cards in the marketplace and the cards you currently carry in your wallet. Also, think about how you spend and what rates you are likely to fall under for most of your spending. If you regularly carry a balance but never get a cash advance, the interest rate on purchases and balances is important while the cash advance rate is meaningless.
4. What are the tax implications?
While donating to a cause by buying stuff is a great way to benefit a charity at no cost to you, you do lose the tax deduction you might get on your federal income taxes for charitable deductions by writing a check or making a direct donation, Walker says.
This is only an issue for taxpayers who itemize instead of using the standard deduction because you can only take specific charitable donations by itemizing. The Washington, D.C.-based Tax Foundation says more than 65 percent of Americans don't itemize, and if you're one of them, you aren't giving up anything by choosing to donate via credit card spending. However, if you do itemize, you might be giving up a larger tax benefit, so it is something to consider.
5. What are the reward benefits, if any?
More cards are combining rewards and charitable donations, Walker says. If you go that route, try to find a card that offers cash back rather than points.
"Cash-back programs are generally more generous than point programs and are easier to keep track of," she says. To give your favorite cause extra bang for your spending buck, you could use your cash-back rewards check as a charitable donation which would help the charity and keep you from losing a tax deduction if you itemize.
6. What are the other benefits?
Some consumers like the idea of carrying a credit card with a cause-based logo. Some affinity card issuers offer charities a choice of a number of logos that can go on a card, and those charities give their members a choice of the look of the card, Levitt says.
With the appetite of consumers up for personalized merchandise, some CardPartner-affiliated causes and charities are offering their members the chance to completely personalize their cards, a trend that Levitt thinks will only accelerate.
"We have two Bassett Hound rescue groups in different parts of the country that have affinity cards with us, and one of them ran an online auction where the winning bidder could place a photo of their dog on the card," he says. "They made $250, and the winner had the chance to carry a completely personalized card."
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