Money: Give Elvis some credit

WHEN LAURISSA Thompson read that Bank of Scotland had issued an Elvis Presley credit card, she not only applied for one on her own behalf but for her boyfriend, too.

"I had been thinking of getting a credit card and when I saw the Elvis card I thought it would be fun. I also applied for one for my boyfriend, Mark John, as he likes Elvis and does a good version of Devil in Disguise on karaoke nights at the local pub," says 25-year-old Laurissa, of Littlebourne, in Kent.

The Elvis card is just one of more than 1,500 affinity cards in issue. These credit cards work just like any other credit card, except every time you use it, the card issuer makes a donation to the affinity group. An affinity group is any organised group where the members have a common interest. It can be a charity, a fan club, a leisure group, sports club, professional organisation or trade union.

The amount donated on these cards varies. But typically for every pounds 100 you spend on your card, a 25p donation is made, and in some cases more. On top of this, if you pay an annual fee on your card, this will go to the affinity group. But usually there is no annual fee on the card and instead the card issuer will contribute between pounds 2.50 and pounds 10 to the affinity group when you take out the card.

This may not sound much, but it can soon mount up. The average amount spent on a credit card each year is more than pounds 1,500. So if your card issuer donates 25p for every pounds 100 you spend, this means an annual donation of pounds 3.75 plus any initial or annual fee on the card.

Groups such as the RSPCA and the Open University have raised more than pounds 1m through affinity cards while the British Legion has raised more than pounds 300,000 and Action Aid more than pounds 500,000. Other groups which have a card include Liverpool Football Club, Harley Davidson Club, National Childbirth Trust, Star Trek, Labour Party, National Chrysanthemum Society, Royal Yachting Association, The Samaritans and Brooke Hospital for Animals.

An affinity card enables the cardholder to support their chosen group in more ways than one and at no expense to themselves. Not only does the group receive money from the card issuer every time the cardholder uses the card, but it also receives publicity and can be a talking point when you are out shopping with the card. In terms of cost, card issuers tend to charge the same rates of interest on affinity cards as on their other credit cards, says Alex Steven, director of affinities at Bank of Scotland.

"These are competitive products although they are not preferential. They are not necessarily the cheapest credit cards around, but they are competitive," he says.

So if the rates are the same as on a standard credit card and the card issuers have more expenses as they have to make the donations, what is in it for them? The answer is the possibility of picking up new business. Not only might they attract new customers, but as most affinity card issuers are banks, they also then might be able to offer these people more than just a credit card.

The major issuers of affinity cards are Bank of Scotland, Beneficial Bank, the Co-operative Bank, MBNA, Midland Bank and Royal Bank of Scotland.

When the Bank of Scotland decided back in 1989 to move into the affinity group market it began by approaching likely groups and offering them a card. Nowadays, it is just as likely to be approached by a prospective group as it is to be making the initial contact.

In order to apply for its own card, the group needs to be properly set up and is likely to have articles of association. The bank will want the group to have a database of at least 15,000 members to make it worth its while.

Once the group has been issued with its own credit card, Bank of Scotland may then look at other products such as personal loans and instant access savings accounts which it thinks the members may be interested in. But it will only approach the members about these if the group endorses the products and they are then branded to the affinity group.

As well as being a good way to attract new customers, affinity cards also tend to bring in good customers, says Mr Steven.

"These groups tend to have members who have proven they are good customers and are keen to be associated with the organisation they are members of," he says.

But before you cut up your old credit card, choose an affinity card, apply and make sure your application is accepted. Then see how much credit you are being offered, as it may not be as high as the limit your existing card issuer is prepared to offer you.