It can be fun to advertise your alma mater with an alumni-branded credit card. But it's less clear whether these cards are as beneficial to consumers as they are to the banks that issue them. 

Credit card companies pay millions of dollars to alumni associations for the right to market their services to prospective alumni cardholders. In the United States, for example, card issuers paid educational institutions and affiliated organizations a whopping US$83 million in 2009 alone for the privilege of marketing credit cards to college grads.

In Canada, MBNA Canada Bank and the Bank of Montreal (BMO) dominate the lucrative alumni credit card market -- giving them access to millions of college graduates, including high-earning professionals. Canada's largest university, for example, the University of Toronto, has half a million active alumni members. 

The value that these cards bring to Canadian consumers, however, is an entirely different story. Here's what CreditCards.ca found after going through the numbers. 

Canadian alumni credit cards: the lowdown
MBNA Canada Bank's credit card offers via alumni associations across Canada are virtually identical. Card details for University of British Columbia alumni on the west coast, for example, mirror those presented to Dalhousie University alumni in the eastern province of Nova Scotia.

In fact, most MBNA alumni card features, such as around-the-clock fraud protection, emergency card replacement and 24-hour customer service are standard on even the most basic non-alumni credit cards.

The most heavily promoted features of MBNA alumni credit cards include special promotional rates and big credit lines. But we wondered, are these benefits any better than other credit cards on the market? Here's what we found:

1. No annual fees. MBNA alumni credit cards don't charge an annual fee. However, this is true of many other competitive products, including low-interest cards with rates as low as 9.99 per cent. MBNA alumni cards, on the other hand, impose a much higher rate of 16.99 per cent for standard purchases.

2. Special introductory rates. The 1.99 per cent promotional rate on balance transfers and cash advances might seem like a compelling advantage for MBNA alumni association cards. However, that temporary discount is severely restricted to transfers or advances made within the first 120 days of opening an account. The promotional rate lasts for only 10 months and then spikes to 18.99 per cent.

3. Maximums up to $100,000. Alumni marketing materials advertise card maximums as high as $100,000. Yet that maximum depends on each applicant's creditworthiness. Small print near the bottom of the application form makes it clear that "if your application is approved, we will advise you of your initial credit limit when you receive your card."

Alma mater-branded rewards: Better than other rewards cards?
Unlike MBNA Canada Bank, BMO specializes in alumni rewards credit cards. For example, BMO alumni rewards cards for Carleton University and Sir Wilfrid Laurier University feature:

• 0.5 per cent-cash back on most card purchases.
• 1.5 per cent cash-back on card purchases at participating Shell gas stations.

For every $200 spent, 0.5 per cent garners $1 in cash-back rewards while 1.5 per cent returns $3. If you spend $12,000 yearly on merchandise using your alumni card plus $5,000 for gas, you can earn a total of $135 in annual cash rewards.

The rewards for these cards are significant; but consumers who carefully research non-alumni rewards credit cards can find much higher cash-back rewards. For example, the BMO Premium CashBack MasterCard provides 1 per cent cash-back on most purchases and 3 per cent cash-back when cardholders buy gas at Shell.

Another consideration is that the interest rate on most BMO alumni rewards cards is 19.5 per cent -- much higher than rates as low as 11.25 per cent for non-alumni rewards cards shown on the Financial Consumer Agency of Canada's credit card comparison tables.

‘Silent' alumni benefits
Without affinity programs like those for alumni credit cards, alumni associations argue that they would have to charge membership fees.

Currently, credit card companies have signed agreements with Canadian alumni associations to contribute cash for each new alumni card account opened and for each purchase made with alumni card credit cards. In turn, alumni organizations use part of those contributions to fund free or low-cost membership programs and services, including alumni education, publications and class reunions.

Signing up for an alumni credit card is one way you can support your alumni association. But you won't receive the advantages of tax-deductible receipts.

The final grade: B-. You are better off focusing on credit card features that directly benefit you and donating to your alumni association directly. If you look outside the alumni credit card market, you are more likely to find lower interest rates, superior special offers and better rewards programs.