Charitable Contribution? Charge it.

For nearly 20 years, Financial institutions have been offering affinity credit cards, or charity credit cards, which benefit nonprofit groups. Charity credit cards are linked to a charity (featured on the card) that is supported by the credit card issue, but are not the same as cobranded credit cards. While cobranded cards offer up great perks and rewards, charity cards are purely philanthropic.

How do they work? Every time you use your credit card (be it for a purchase, a cash advance or even a balance transfer), the issuer donates a percentage of the total to the charity of your choice.

How much will I end up donating? You will donate in proportion to how much you spend. It is important to note, charity credit cards donate a fairly low percentage of your spending – as in 0.25-0.65% (and oftentimes, the cards will not disclose the percentage). That amounts to just 25-65 cents to charity for every 100 dollars that you spend. But at the end of the year, your contributions to your favorite charity can add up to around $50. However, this donation is non tax-deductible as it is donated via a contractual agreement.

How do affinity cards compare to other cards?
The APR on charity cards tends to run a bit high, between 15 percent and 22 percent, although it is possible to find them for less. They also can carry annual fees, and typically do not enjoy the perks of benefits that other credit cards do, though they can offer certain discounts related to their cause.

The lesson here is that these cards are not for people who tend to carry balances on their credit cards. For people who are committed to zero balances and pay their cards off in full every month, these cards are a great option.

Do many people have them? Charity cards are incredibly popular and have high retention rates. By using a charity credit card, you are not just donating, you are participating in word-of-mouth marketing by talking about and informing others on your cause at the register.

What kind of charities participate?
Environmental groups, public education funds, homeless shelters, animal shelters, medical research programs, children’s causes, university alumni associations and more. Some of the most popular are the Humane Society Visa card and Target’s affinity “Red Card” that has generated $246 million for Take Charge of Education since 1997.

By signing up for an affinity card, your donations are automatic, frequent, and do not come out of your pocket; your credit card company is doing the donating. The more you spend on yourself, the more you donate to your favorite cause through your charity credit card and the greater the impact you can have.