Charity Credit Cards

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Charity cards are really not all that charitable to the users and though they appeal to the users to show that they are doing something for their charity, they usually end up making profits for the bank. Paying off the card in full is the only way that you can benefit the charity the card endorses. Any left over balance is usually charged at the full rate of interest and that puts credit card holders in a trap. Of course, very few cards would actually mention this in their advertisements!

Did you know that the bank gave about 0.25% of your spending to the charity? Furthermore, you cannot claim any tax relief for using a charity card and it is the bank which benefits from it by claiming it as tax relief for themselves! Some cards do give a higher percentage to charities depending on the level of spending but you can still give directly to the charities and it is likely to cost you less in the long run.

It is difficult to sign up for many charity cards (so that they get the initial amount) as it is likely to affect your credit score and this is a short term method to give. However, if you are keen to give a percentage of your spending to charities then what you need to do is use a cash back card and use the cash that you get back to give to charities. This is a pretty simple system and gives you the opportunity to give more (since percentage of cash back are higher) and claim tax benefits. High usage of cash back cards lets you give more to the charity.

A higher value card like the Amex Platinum can increase your charity figure by 500%. Do keep in mind that you would need to keep paying your cash back card in full each month in order to stay out of the interest trap. You can even automate your payments by linking the card to your bank account and all you would need to do is send a separate cheque to the charity at the end of the month as soon as you see your card statement. Not only is this method smarter in actual financial terms, it also helps you donate directly. So are you still going to hang on to your charity branded card and let the banks reap the benefit of your good deeds?