NEW YORK (MarketWatch) -- Affinity credit cards can help you support worthy causes, but watch out for high rates and tiny donations.
One of the simplest and most gratifying ways to help your favorite worthy cause is to use an affinity credit card, which makes a small donation to a charitable group every time you purchase something with it.
Giving that way may seem painless because it's the issuing bank, not you, that makes the contribution. But depending on the card you have and your payment habits, you could feel a decidedly uncharitable pinch in the form of high finance charges.
Consumer Reports' Money Advisor newsletter suggests that while you might get a warm feeling for supporting your pet cause you should also examine the bank that's issuing the card and stands to profit when you use it.
"Your credit card may have a picture of a whale on it, but the actions of the bank may not be what you support," says Joe Ridout, a spokesman for Consumer Action, a national advocacy organization in San Francisco.
Another drawback to using affinity cards is that there's no measurable way to ensure that the amount the card issuer says goes to charity actually benefits the program you support, rather than overhead and administrative fees, although some charities specifically say that the donation goes directly to projects.
The right card for you will depend on several considerations, such as how much you want to see go to the charity, the card's annual interest rate, and your spending and payment pattern. If you pay off your balance in full each month, the annual interest rate needn't concern you too much. But if you often carry a balance, you might be better off getting a card with a lower interest rate and writing a check to your favorite cause.
Remember also that many general purpose and rewards credit cards, such as the relaunched BankAmericard and American Express cards, offer their holders the option of donating earned points or cash rewards to charities. If they have lower rates than an affinity card you're considering, you can give to your cause of choice on more favorable terms.
On the other hand, a growing number of affinity cards give users the option to earn reward points redeemable for cash or merchandise for themselves and still donate something to a charity they support. This is one way to make up for the fact that unlike other forms of charitable giving, you can't claim a year-end tax deduction for gifts made on your behalf through your affinity card.
With so many options available, you can choose the affinity card that best aligns with your individual needs and beliefs. Just don't let your passion for the cause blind you to what it'll cost you to support it through using the card.
By Marshall Loeb