Not just flexible but philanthropic, too

The cards can offer good value if you pay them off in full every month

IN THE Eighties, excess was all. The bigger the wodge of plastic in your wallet, the better. In the caring Nineties, however, credit cards have taken on a less selfish slant. The past few years have seen a boom in affinity cards - credit cards that pay a donation to the charity or organisation of your choice every time you use the card.

Moreover, for card users who pay off their bill every month, these cards can be competitive with anything else available.

You can now get a credit card linked to one of more than 400 charities, political parties and other organisations. The biggest UK affinity card issuer, the Bank of Scotland, has cards linked to organisations as diverse as Battersea Dogs Home, the Constabulary Travel Club, Millwall Football Club and even the National Federation of Fish Fryers.

More organisations are jumping on the card bandwagon all the time. The Consumers' Association, for example, is considering launching a card for readers of its magazine, Which?.

Dave Roberts, a director of the association, said the card would be priced competitively but "the really different thing we'll offer is free legal advice for any problems with purchases made using the card".

So what is the deal the estimated three to four million affinity cardholders are actually getting?

An affinity card will, typically, pay a fixed donation to the linked organisation of 25p for every pounds l00 spent on the card, on top of, perhaps, a pounds 5 donation the first time you use the card. A donation of 25p for every pounds l00 may not sound much, but the sums can add up. The Bank of Scotland affinity cards have paid a total of pounds 1.3m so far to charities, with the biggest beneficiary - the International Fund for Animal Welfare - getting more than pounds 346,000.

Nevertheless, it is not worth choosing a card purely on the basis of loyalty to the organisation to which it is linked. It is also important to check that the card itself is good value. Take, for example, the Halifax Visa Charity Card, which charges a pounds l2 annual fee, pounds 5 of which is rebated to the chosen charity each year. It also donates 20p for every pounds 100 spent.

But cardholders could instead opt for a non-affinity card which does not charge a fee and simply give the charity each year the pounds 12 they would otherwise pay for the Halifax card. This non-affinity route would actually leave the charity better off, unless the cardholder spends more than pounds 3,500 a year - the spending required to make up the pounds 7 of the annual fee that is not rebated to the charity.

However, the cards can offer good value if you choose the right issuer and pay the card off in full each month. The best value if you are in this position is to choose a card with no annual fee.

The options include Midland's CareCard Mastercard, which offers a choice of 16 charities; the Co-operative Bank's Visa card, which is linked to a handful of big charities and guaranteed free for life as long as you use the card 10 times each year; and the Bank of Scotland's Affinity Mastercard, which is linked to 69 charities and is free provided you spend at least pounds 2,000 on the card each year (see table).

But beware if you often borrow on your credit card. There are now cheaper, non-affinity credit cards to choose from. True, the annual rates charged for borrowing (APRs) on many affinity cards - at around 20 to 24 per cent -are in line with many of the big credit cards on the market. But at up to four times the bank base rate of interest, these are all appallingly expensive.

By comparison, for people who borrow a lot on their card, the Robert Fleming/Save & Prosper Visa card charges an APR of just 11.5 per cent, with no annual fee. The card, however, has no interest-free period - you pay interest on each purchase from the date it is made - so it is poor value if you quite often pay off your bill in full. Alternatively, a new card from Advanta/Royal Bank of Scotland offers an interest-free period, charges no fee and has an APR of less than 16 per cent.

It is also worth bearing in mind that, while charities very much welcome the additional income that affinity cards bring in, there are more reliable and much more tax-efficient ways of making donations. These include:

q Payroll giving. If your employer runs a Give-As-You-Earn scheme, you can give a set monthly amount to the charity of your choice. You get tax relief at your highest rate of income tax on donations of up to pounds 75 a month (pounds l00 from 6 April). For a higher-rate taxpayer, this means that for every pounds 6 reduction in their taxed income, the charity effectively gets pounds 10.

q Gift Aid. You also get full income tax relief on single donations to charities of at least pounds 250. The gift is paid net of 25 per cent tax to the charity, which can then reclaim the tax, while higher-rate taxpayers can reclaim an extra 15 per cent relief on the gift through their tax return.

The Charities Aid Foundation (01732 520000) offers an account which allows you to benefit from the pounds 250 Gift Aid tax relief while spreading the donation between several charities. You can also open this account if you donate more than pounds 10 a month via payroll giving, and then use the chequebook and debit card offered with the account to give to any recognised charity.

q Jean Eaglesham works for `Investors Chronicle'.