Charity credit cards can pay off

With the Christmas season only weeks away shoppers will be thinking of doing their good deed for charity by taking out a charity credit card.    

Charity credit cards offer to donate between 0.25% and 0.3% of any spending on your card to a particular charity, so on a £10,000 annual spend, the charity would receive £25 to £30 pounds.  There is usually an initial, one-off payment to the charity too of between £20 and £40 to make it worth your while taking out the card.

There is no particular penalty for holding a charity card – interest rates charged range from 11.9% to 18.9% for purchases which is average – although it is possible to sign up for a card with a lower rate if it is a non-charity card.  But the big benefit of using a charity card is that you don’t need to think about making the donation and you feel good every time you spend.

Consumer organisation Which? recently surveyed charity cards and points out that if you are going to choose a charity card, apply through the charity’s website as they often get a bigger donation if you apply direct through the charity than to the card issuer.

For example, if you apply for a card through Breakthrough Breast Cancer’s website the charity receives £40 immediately.  If you apply through the card issuer’s website, MBNA, the charity receives just £5.  Unfortunately, MBNA is one of the major issuers of charity cards which include such popular charities as British Heart Foundation, The National Trust and World Wildlife Fund.

Choose your charity first and then look at the credit card on offer.  If you don’t pay off your bills in full each month it may be better to simply make a donation direct or you could be penalised by a high interest rate.  On a typical charity card and an annual spend of £10,000, the charity would receive £25.  But if you opted for a cash back card you could earn as much as £90 which you could donate direct to the charity – but it’s a lot more hassle.

Perhaps one of the best cards on offer is RBS/Halifax RSPCA card which makes an initial donation of £20 to this very popular charity and subsequently 25p for every £100 spent on the card.  But everyone has their favourite charity and this is likely to influence the choice of card rather than terms and conditions.