A credit card that donates to a chosen charity on your behalf when you spend sounds like a great idea. But are they really as good as they sound?
Charity credit cards enable you to automatically donate to a cause close to your heart while spending.
There are a range of credit cards available for charities including Shelter and the RSPCA. The card will be branded with the charity’s logo and can be used like a normal credit card.
They’re just regular credit cards, however they’re tied to a particular charity.
They’re issued by a lender (not the charity) who will donate a percentage of your spend to the charitable cause. This is usually around 0.25%, so it’s essentially like donating change every time you spend.
You don’t need to budget in any extra money for your charitable donation as it comes out of what you were already spending.
As well as a donation every time you spend, your lender may give the charity a donation when you take out the card. They could even make an annual donation for every year you have the account open.
It all sounds great, but if you take into account that you’d need to spend £1000 per month for your charity to receive a £2.50 donation, is it really worth it?
You may want to think about other ways to show support, because although it may be tempting to automatically donate as you spend, a credit card is still a serious financial commitment.
A charity credit card may not be the best fit for your finances and you could be missing out on longer 0% introductory periods or lower interest rates with a different card.
It’s worth considering that:
Here’s what you need to look out for:
If you really want to use your credit card spending as a way of donating to charity, consider a cashback card.
You can earn a percentage of what you spend back on everyday purchases, usually between 1% and 5%, which is then paid to you annually.
You can then donate this cashback to your chosen charity. You’re not spending any more than you were going to, and your charitable cause receives more money than it would have done with a charity credit card.
Always remember to Gift Aid your donation too, so the charity can claim back the income tax you paid on the donation.
A word of warning though, if you do take out a cashback credit card just make sure you clear the balance in full each month or you’ll be charged interest that could wipe out anything you earn. You’ll also want to watch out for annual fees.
As with any credit card, weigh up the pros and cons, as well as assessing whether it’s right for your spending needs.
If you just want to help your charity without opening a credit card, consider: