Whether you are 18 or just received your first credit card, you are still 60 years old and your wallet is full of credit cards. It is tempting to charge as much as possible. However, you should beware of such a move. Regular use of credit cards and paying on time can help you build a longer, more complete credit history. But holding any type of balance is risky, especially the large balance associated with your credit line.
You may have seen a branded credit card with a sports team or a non-profit organization. These credit cards are called affinity credit cards—a type of credit card that a credit card issuer works with an organization (usually a non-profit organization). People choose an affinity credit card to show their loyalty to the organization, or because of the use of credit cards to help the organization. The partnership between credit card issuers and organizations helps promote credit cards to attract more customers, especially when the organization has a large audience.Sports teams, universities, professional organizations and non-profit organizations usually have charity credit cards. When using an affinity credit card, the name of the organization is usually included in the name of the credit card, and the front of the physical credit card has a logo and brand color.
How affinity credit cards work
Affinity credit cards help generate revenue, build loyalty, and spread the message of the organization. Whether your purchase has an actual impact on your organization depends on the agreement between the organization and the credit card issuer.
The credit card agreement will tell you how much the affiliate will receive from the credit card issuer. Make sure the credit card really benefits the organization on the front of the credit card. Working with non-profit organizations is not just for altruism. Credit card issuers account for up to 3% of the cost of each purchase of a credit card.
Feature
Affinity credit cards work the same way as other credit cards. The credit card issuer gives you a certain amount of credit based on your credit card and credit. Then, you must pay at least the minimum payment for any balance on your credit card. Paying to a credit card issuer is like using another credit card.
When you choose an affinity credit card, you should consider many of the same factors as other credit cards. What is the annual fee? What is the interest rate? What is the reward on the credit card? Is there an external transaction fee?
In addition to the credit card feature, you should also check the amount your organization receives to purchase a credit card. Don't think that a credit card is a good deal for you just because it is associated with the organization you support. Affinity credit card rates tend to be higher than other credit cards. To avoid extra interest payments, especially if you want to get rewards through credit card purchases, you should pay your balance in full every month.
A credit card is available to provide a rewards program that encourages cardholders to use credit cards. The rewards program may motivate you to use a credit card, but may not be as profitable as other types of reward credit cards. You may also find associated credit cards that provide a registration bonus or an introductory interest rate at the time of a balance transfer or purchase.
Charitable donation substitute
Of course, an affinity credit card is not the only way you can contribute to an organization you can support. You can donate directly to the organization based on your budget and annual donation goals. In some cases, direct donations may have a larger, more direct impact than the benefits of a charity credit card. Charitable donations that you provide directly to a qualified non-profit organization may also be eligible for deductions if the charity credit card you purchased does not qualify for tax exemption.
Risk of using an affinity credit card
There are some risks in getting an affinity credit card. If the credit card issuer and affiliates choose to terminate the partnership, your credit card may also be cancelled. In this case, you may lose any rewards you accumulate and the ability to make new purchases on your credit card. Normally, you will be allowed to pay your balance in accordance with the previous terms.
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A recent report showed that college students have an average of more than four credit cards with a total balance of more than $3,000. Some students have credit card debts of up to $7,000. Graduating with so many credit card debts will hinder you from entering the real world, especially if you missed a payment or default.