Guide to charity credit cards

What are charity credit cards?

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.

How do they work?

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.

What are the advantages?

It’s worth considering that:

• Charities can receive donations more regularly
• Donations are automatic, so you don’t have to think about it
• The money is taken out of what you were already spending, rather than added on top

What are the disadvantages?

Here’s what you need to look out for:

• Unless you spend a lot, your donation to the charity will likely be negligible
• It may not be the right credit card for your finances, especially if you’re looking for a lengthy 0% introductory period on balance transfers or purchases
• Like all credit cards, you may be charged interest if you don’t pay off the balance in full each month and missing payments or going over your credit limit can harm your credit score
• Each individual card is tied to one specific charity, you’re not able to donate to different causes with it
• It may not be the most effective way to donate to a charity

What are the alternatives?

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:

• Donate to your charity monthly or annually an amount you can easily afford via direct debit
• Some payment platforms like PayPal allow you to add a donation to charity onto your transactions
• The online bank Monzo enables you to round up any payments you make to the nearest pound and put the spare change into a separate pot. You could then donate this annually