moneysupermarket.com: Charity credit cards

Commenting on charity credit cards ahead of Comic Relief on March 16, Robert Kenley, head of credit cards at moneysupermarket.com, said:

With Red Nose Day taking place this Friday people will be reminded to dig deep for a worthy cause. However, those thinking of using credit cards specifically set up to donate money to a given charity should be warned this is not the most efficient way of giving, as many only offer paltry donations to their respective good causes.

“All charity credit cards work in a similar way. Usually, when the card is taken out an initial donation is made to the affiliated charity and a percentage of the value of every subsequent purchase is also donated. Some make a small contribution for every year the card is kept open.

“Unfortunately, most of these cards only match a pitiful percentage of the value of the purchase to give to charity, typically between 0.25 per cent and 0.5 per cent. The Amex Red card is still the most beneficial, donating up to 1.25 per cent. But anyone who really wants to support a charity should consider a credit card with the longest 0 per cent offer on either balance transfers or purchases (depending on their typical usage) and instead, donate the interest they save directly to the charity.

“For example, a person spending £200 a month for a year and repaying the minimum amount each month would face £199.76 in interest charges with the RSPCA credit card – and a measly £21 would be donated to the charity over this time. Yet, if the credit card holder instead used the Halifax One Online Exclusive credit card for purchases they would save £199.76 in a year and this in-turn could be donated to the RSPCA – £179 more than the amount given to the RSPCA by the charity specific card.

“Providers that take their charitable mandate seriously should follow Co-Operative Bank’s lead (which provides the Oxfam Advantage Platinum Card) as it donates a percentage of the balance transfer value to charity in addition to a one-off initial donation and percentage from all expenditure, plus has a good 0 per cent offer to encourage balance transfers and purchases. People could then support their chosen charities via their credit cards to a much more significant tune.

”Ultimately, charity credit cards are most effective for people who really want to give something to charity, but know they will not be disciplined enough to transfer the interest they have saved from a 0 per cent offer. So, if the latter seems like too much hassle, then even though charity cards do not give the most generous donations, any contribution to a worthy cause is better than none.”