Credit Cards and Charity: Giving (and Getting) the Most Value
The gist: Your credit card might make giving more rewarding for both you and your charity of choice.
In a season obsessed with commercialism and consumerism, giving to charity offers much-needed perspective and those warm fuzzies that we associate with holiday season. Turns out that credit card companies are jumping on the charity bandwagon as well. And while some are more donation-friendly than others, you can usually find a way to either get rewarded for giving, or make sure that the place you’re donating to gets its money’s worth.
NerdWallet’s Most Charitable Credit Card Issuer of 2011
Capital One actually puts its money where its mouth is: it’s giving up money it would earn anyway to ensure that more of what you donate actually gets to your charity. Most issuers give you bonus rewards or let you redeem for donations, but really, that’s no skin off their nose. But Capital One gives out of its own pockets, not yours.
When you donate via credit card, the charity must pay a transaction fee as a percentage of the donation. This can easily be around 2.5%, so if you make a $500 donation on your credit card, $12.50 of that goes into someone else’s pocket. But if you donate through Capital One’s No Hassle Giving site, the issuer makes sure that the charity receives 100% of the donation. (Their site also makes it easy for you to choose whom you’ll donate to – for more information, check out our post on Capital One No Hassle Giving).
Honorable mentions – credit cards
Chase: The Chase Freedom offers 5% cash back in rotating bonus categories, and this quarter (October – December), those categories include charitable donations.
US Bank: You earn triple FlexPoints on charitable donations with your US Bank FlexPerks Visa.
Honorable mentions – issuers
American Airlines: Yes, okay, not a credit card issuer, deal with it. But if you have the AAdvantage credit card, or are involved in the AA loyalty program, you will earn 10 miles per $1 donated to the National Foundation for Cancer Research, Komen, and USO; and 2 miles per $1 donated to UNICEF.
Discover: If you have a Discover credit card that earns cash back, you can donate it to one of Discover’s partner charities. The organization that receives the most donations at the end of the year will get an additional $25,000 from Discover.
Discover’s partners: the American Cancer Society, the ASPCA, the Red Cross, Children’s Miracle Network, Junior Achievement, the Juvenile Diabetes Research Foundation, the Make-a-Wish Foundation, Operation Homefront and the World Wildlife Fund.
…and the rest of them
Citi: Citi allows you to donate your ThankYou Points to charity, but with heavy caveats. If you give to Citi’s charity of choice (the American Red Cross), you can trade as few as 2,500 points for a $25 donation. But if you want to make a charitable donation to a place you choose, you’d better have a lot of points stashed away. Redemption starts at 1,900 points for a $10 donation – a pretty pathetic value of ½ cent per point. You can get the full value of 1 cent per point if you donate 25,000 or 50,000 points, but you only get 0.8 cents per point if you donate 100,000. (Why? Don’t ask us.) And one more thing: the donations aren’t tax-deductible.
Bank of America: You can use your WorldPoints to donate to the Make-a-Wish Foundation, Komen, and the World Wildlife Fund.
Charity credit cards: These are usually a bad way to give back. Yes, you get a shiny branded credit card with the pink ribbon logo, but you generally earn at most 1% back to your charity with each purchase. You’re much, much better off getting a cash back credit card (or one that lets you donate to charity with your rewards points). You can turn right around and give that money to charity, and you get the increased flexibility of getting to choose whom you’ll donate to. Plus, most charities have to pay a surcharge if you donate by credit card, so handing them a check or cash actually delivers better value.