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Charity credit cards used to allow you to support a chosen charity every time you used your card, but there are better ways to donate nowadays
Requiring no extra effort or expense on your part, charity credit cards used to be an easy way of donating to non-profit organisations such the WWF, RSPCA and the National Trust. These types of cards have now been withdrawn, so what are your options?
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Charity card providers - MBNA was the largest of them but no longer has any currently available - used to make an initial donation to the charity when the card was activated. They would then add a percentage – usually about 0.25% – of what you spent to the designated charity. They also paid the charity an annual fee.
However, cashback credit cards can give you better rewards, which you can then donate to your charity of choice – compare cashback credit cards with uSwitch.
Some credit cards that earn airmiles (such as British Airways Avios) or other loyalty points for each purchase you make on the card, which can also be donated to charity.
It is more difficult to value these airmiles or loyalty points compared with standard cash. However, depending on how the charity can use them, they could be valuable to your favourite charity, especially if those charities have large travel costs. You may also earn a large amount of airmiles or loyalty points as a sign-up bonus when you are approved for that card which you could also donate to your charity.
If maximising the amount your charity receives is your top priority, then do your homework on the cost to you versus what your card issuer might donate to ensure your charity receives the biggest benefit.
Cashback credit cards or charity cards?
Where most charity credit cards gave just 25p for every £100 spent, cashback credit cards can offer far greater rates of reward which you can then personally donate to the charity of your choice. 0.25% is not a huge donation to make and unless you are spending massive sums of money on the card, the charity is not going to receive that much benefit.
Then there’s Gift Aid, the government scheme which allows charities to reclaim tax on your donation.Gift Aid means that your cashback could be donated to the charity with the charity reclaiming the basic rate of tax on top of your donation.
The main benefit of a card for charity is that it did most of legwork for you – all you had to do is spend money on it and the card will take care of the donating. However, you were essentially 'paying' for this convenience through the lower donation amount given by our card issuer to your nominated charity.
While giving to charity via a cashback card requires a bit more effort, the numbers speak for themselves – cashback credit cards beat charity cards hands down.
The cashback credit card option also gives you far more freedom to donate that cash to as many charities as you like. It's easy to track how much cashback you have earned each year just by checking your credit card statements or online account. If you know that you have earned this money just from the card you could then donate the entire amount to your favourite charity or charities.
Some people also found that their charitable intentions had a negative impact on their credit score. Trying to open multiple charity credit cards, to donate to several good causes, looked like a desperate attempt to get extra credit, damaging an otherwise good personal credit rating.