Giving to Charity With a Credit Card? It’ll Cost the Charity

Processing fees can cut the value of your donation by 2% or more. Consider writing a check — or donating rewards.

Anisha SekarSeptember 22, 2020

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Write a $100 check to a charity, and the charity gets $100.

Drop a $100 bill in a charity's donation box, and the charity gets $100.

Donate $100 to a charity using your credit card, and the charity gets maybe $98.

The reason for that disparity is the processing fees that accompany credit card transactions. Those fees make credit cards a suboptimal way to give to the causes you support.

Credit card fees

Every credit card transaction incurs processing fees, and it's typically the merchant — the person accepting the card as payment — who pays them. When the merchant is a store or restaurant, it just incorporates the fees into its prices, as a cost of doing business. But charities don't have really prices to adjust. The fees come straight out of your donation.

For example, a charitable donation using a Visa card will carry a fee of 10 cents plus 1.35% of the amount of the transaction. A $100 donation, therefore, will net the charity $98.55. The fee on a Mastercard is 10 cents plus 2%, so a $100 donation results in $97.90 going to the charity. American Express and Discover have fees of 2.25% for certain donations.

A charity would of course prefer getting $98 to getting nothing, but if you want to give to charity without a middleman skimming off the top, credit cards aren't the way to go. For that matter, neither are a lot of other payment systems, such as PayPal, Square or crowdfunding sites, most of which charge fees that rival or exceed those on credit cards.

Donating credit card rewards

Processing fees apply when you use a credit card to make a cash donation — that is, when you want to give $100 to a charity and "put it on your card." But there's a way to donate through your credit card without any fees, and that's by donating your accumulated credit card rewards.

Many credit card issuers, frequent-flyer programs and hotel loyalty programs offer a way to donate your cash back, points or miles to charity. Unlike cash donations, however, these are generally not tax-deductible.

The bottom line

You certainly can donate to charity by putting it on your credit card. Just be aware that the charity won't get the full value. If you can write a check instead, they'd appreciate it.

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