Credit Cards: Spending with scruples

Affinity credit card purchases can benefit charities, sports clubs - and even political parties.

GIVE WHILE you spend. That is the message you send if use one of the thousand plus affinity cards that are in use every day. And the Credit Card Research Group estimates that around three million of us now have these cards.

In 1997 the Group estimates that we spent around pounds 34bn on purchases using these cards and that usage grew by some 20 per cent over the previous year.

Affinity cards are issued on behalf of charities, political parties, sports clubs and other organisations. They are usually offered by the smaller credit card issuers - it is noticeable that the major ones such as Barclaycard and the other main high street banks don't offer them.

Leaders in the affinity field are Bank of Scotland, MBNA and the combined Beneficial and HFC operation. For them it serves a dual purpose. As well as being seen to link up with worthwhile causes, it also enables them to build up a customer base quickly, especially in England, where they are relatively unknown.

The latest to be issued comes from People's Bank, the low-cost credit card provider, on behalf of Bounty, the organisation that gives practical advice and free product sample packs to new and expectant mothers.

The Family card as it is called, is a credit card with a difference. It is the first to be offered with a personalised photo - as distinct from one with a security photo. "This makes it ideal for those with a young family" says People's Bank's Gary Fitton. "If you want one of our cards and pass the normal credit tests, all you have do is send us a favourite photo, and providing it's legal and not political, we then scan and put it on the card."

Banks issuing affinity cards rarely say how much the charities and organisations get from your spending. Usually however, they will receive between pounds 5 and pounds 10 when you sign up and then between 2.5p and 5p for each transaction made with it.

Some of the cards have contributed sizeable donations to their affinity partner. The National Trust is estimated to have raised over pounds 1.7m from people using its card. The RSPCA card, issued by the Bank of Scotland in 1993, now has some 96,000 users who have donated over pounds 1m through their transactions with the card. Meanwhile the Halifax's Visa charity card, which has been around for some 10 years, has so far raised over pounds 10m for the three charities it supports - the British Heart Foundation, Imperial Cancer Research Fund and Mencap.

Affinity cards are no more expensive than conventional credit cards. Often they are cheaper than those issued by the main high street banks. The new Family Card, a Mastercard, has a 16.9 per cent APR, that is annual percentage rate, the interest you pay. Mind you, it is slightly more expensive than the People's Bank Classic Card rate of 15.9 per cent but it still more than 4 per cent below the interest rate charged by the average credit card. In addition, there is no annual fee and, if the balance is paid off in full, a 56-day interest-free period applies.

"In fact, most affinity cards tend to be free of annual charges," says Jonathan Moakes of Affinity Solutions, a marketing consultancy that, among other things, puts credit card issuers together with organisations wanting to raise funds. "And most are highly competitive on interest rates."

Research carried out in the US, where affinity cards are reckoned to account for some 20 per cent of credit card spending, and here show that customers care more about the charges than any other matters. "If the price and service are good, then people will be motivated to take them" says Mr Moakes.

Mind you, not everyone is happy. According to Affinity Solution's own survey of organisations that raise money through affinity cards, some 43 per cent of them will seek a new credit card partner when their current contracts expire.

"There are often legitimate reasons why the partnership doesn't always work," says Jonathan Moakes. "The affinity with the issuer may not be strong enough. This can only be found out when there is a poor take-up. Maybe the customer database does not have the correct creditworthiness to pass."

But don't let this stop you using an affinity card. Providing you support the organisation and the charges are right, you can happily use your card knowing that your favourite charity, football club, or whatever, will benefit.