Charity Credit Card Guide
What is a charity credit card?
A charity card gives you the chance to raise money for your favourite charity because every time you use the card, a percentage of the amount you spend is donated to a good cause. Some cards also make a one-off donation to the charity when you sign up, plus an additional gift if you spend a certain amount within a certain time.
You can give money to a wide range of charities with a charity credit card, including the RSPCA, WWF, Save the Children and Oxfam.
What are the benefits of a charity credit card?
It’s easy to give money regularly to a good cause with a charity card because the donation is made automatically – no forms to fill in or cheques to write.
The donation also costs you nothing because it is given by the card issuer every time you spend on the card. And the more you spend, the bigger the donation.
Are there any downsides to charity credit cards?
The interest rates on charity cards can often be high, typically about 17%. So you should only consider a charity credit card if you are confident that you can pay off your balance in full each month. If you borrow money on the card, the interest charges will almost certainly outweigh the charitable donations.
Some critics claim that the donations made through charity cards are too small: the typical donation rate is just 0.25%, or 25p for every £100 you spend. The charity is also usually unable to claim back any tax because you cannot normally Gift Aid a donation. If you give money to a good cause through Gift Aid, the charity will get back from the taxman 25p for every £1. So, a £10 donation will be worth £12.50 to the charity.
What are the alternatives?
You can often raise more money for your favourite charity with a cashback credit card because the cashback rate is usually higher than the donation rate. But you have to be disciplined. You not only have to pay off your balance in full each month, but you also have to remember to donate the cashback to charity.
You can check out the best deals on charity credit cards and cashback cards with Moneysupermarket’s free online comparison service. Visit the site today and you can start giving as you spend.
Glossary of terms
APR
This stands for Annual Percentage Rate. Any firm that lends money is required by law to quote the APR. Introductory rates do not include arrangement fees you may be charged and also don’t reflect any higher rate of interest that your borrowings will ultimately revert to. The APR takes into account the interest on a loan plus and additional charges making it easier for you to compare products. In general, the lower the APR the better the deal.
Balance Transfer
Balance transfer rates are applied to existing card debt that is being moved from one issuer to another or a consolidation of other debts. These rates tend to be lower than standard rates and apply to the debt transferred or consolidated for a specified term or until it is repaid in full.
Credit Card
Credit cards are a form of borrowing used to purchase goods and services, to obtain cash advances and for consolidating debt.
Direct Debit
This allows an organisation to take money directly from a persons bank account
Minimum payment
The amount you must pay each month to keep your account in order
Interest-free period
The time between when you buy something on the card and the date when you must pay your monthly bill. This can be 50 days or more and is interest-free. So if you settle your bill in full every month, it's free borrowing.
Promotional Rate
A rate that is applied to your account until a given expiry date. Thereafter it will revert to the rate applicable to your account at that time.
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Representative Example: If you spend £1,200 at a purchase interest rate of 12.9% (variable) your Representative APR will be 12.9% (variable).