Charity credit cards have become increasingly popular over recent years, as people seek to support their favourite charities at seemingly no extra cost to themselves. When you take out one of these cards, a one-off donation of a few dollars is made by the card issuer to the charity linked to the card, followed up by a small percentage of everything you spend, again donated by the card company rather than the cardholder.
Cards are available covering a huge range of charitable organisations, from local to national and even international, and there is almost certain to be one that supports an area of concern to you.
All this sounds like a good deal for everyone involved, but is the picture as simple as that? The first drawback to a charity card is that the interest rates, balance transfer offers, and other deals are rarely as generous to the cardholder as those featured by other cards that compete under being a 'best buy' card. This may be a price you feel worth paying for the benefit the charity will receive, but you might in fact be better getting a cheaper card and donating the money you save to your charity directly.
Even putting aside the issue of higher interest charges, charity cards have another drawback - the percentage of what you spend that is donated is usually tiny, with 0.25% being a typical figure. Compare this to a typical cashback card which will pay between 1% and 2% of your spending, and it's easy to see that the card issuer may not be acting as generously as it appears. Again, by donating your saved up cashback directly to your chosen charity you might have a larger impact.
The other point to bear in mind is that the money charities get from the credit card companies isn't classed as tax-free, unlike direct donations, making it even less valuable.
So are charity cards a waste of time? In terms of actual sums donated they might seem so, but there are advantages to the charity concerned above and beyond the simple percentage donations. Firstly, by using your card you're helping to publicise the charity you're interested in, just by the simple act of handing it over to counter assistants, waiters and the like, who will notice an unusual card, as will your friends and colleagues.
Secondly, the charity is guaranteed that the donations will be made, however small. If you save up your cashback with the intention of donating it, there's always the chance that when you actually get the money you may have another pressing use for it, and the charity misses out.
Lastly, and perhaps most importantly, the huge marketing muscle and advertising resources of the card issuer are put towards publicising the card and the charity, at least to some extent. This means that more people will probably end up donating in total, even if the individual figures are smaller, and the charity gets more exposure in general.
So in summary, while charity cards may not be the most effective way to donate to charity, and they certainly aren't among the most attractive cards on the market financially, they can still be a worthwhile option if you find a card supporting a charity you have an interest in helping.
Michael writes for credit cards review site Card Sense, which has sections on charity credit cards along with balance transfer deals, cashback cards and rewards schemes.