Charity credit cards allow you to support a chosen charity every time you use your card, but are there better ways to donate?
Requiring no extra effort or expense on your part, charity credit cards can be an easy way of donating to non-profit organisations such the WWF, RSPCA and the National Trust. If you would like to donate to a registered charity like these but can't find the spare change to give regularly, these credit cards could be a good solution.
Compare all sorts of credit cards from 0% cards to rewards, balance transfer to cashback cards.
Card providers will often make an initial donation to the charity when the card is activated and from then on, whenever you use your charity credit card, your provider will give a percentage – usually about 0.25% – of what you spend to the designated charity.
There may also be an annual charity bonus given by your card issuer to your charity each year you hold the card. If there is an annual fee for the charity credit card, you are essentially giving a charitable donation to your credit card issuer, and they may then pass on a donation to your charity, though the donation may be less than your 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 very 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.
Depending on the card, there could also be an additional bonus donated to your charity if you transfer a balance from another credit card you have. Keep in mind there may be a balance transfer fee. The cost of this balance transfer may be far more than the charity donation your card issuer offers to make for doing that balance transfer. 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.
Where most charity credit cards give 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 without tax applying.
The main benefit of a card for charity is that it does most of legwork for you – all you have to do is spend money on it and the card will take care of the donating. However, you are essentially 'paying' for this convenience through the lower donation amount given by our card issuer to your nominated charity.
Yet, 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. If you are going to the effort to donate to charity by taking out a charity credit card, then do ask yourself if you can give more through the earnings from a cashback credit card and then donating this money to your registered charity yourself.
The cashback credit card option also gives you far more freedom to donate that cash to as many charities as you like. You are not locked into the limited charity or charities you have designated for your charity credit card. 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.
Be aware that your charitable intentions could have a negative impact on your credit score. You might be tempted to open multiple charity credit cards, especially if there's no cost to do so and your charity will receive a donation for each card you are approved for. However multiple card applications could damage your personal credit rating, which may well not be worth it for the small charity donation your card issuer might make on your behalf.