If you write a $100 check to a charity, the charity gets $100.
If you drop a $100 bill in a charity's donation box, the charity gets $100.
But if you donate $100 to a charity using a credit card, the charity might not get the full $100.
The reason for this disparity comes down to the processing fees that accompany credit card transactions. As such, credit cards may not be the best payment method for giving; nevertheless, there are ways to ensure the charity gets the full donation amount.
Offsetting credit card fees
Every credit card transaction incurs processing fees, which are typically paid by the person or business who accepts credit card payments. Businesses can offset these processing fees by folding them into the prices of its goods and services, but charities don't have that option. The fees come straight out of your donation.
Say you’re donating $100 to a local food pantry with a credit card, which assesses a 2.2% processing fee. Instead of getting $100, the food pantry gets $97.80.
Some charities have found a workaround, though: asking the giver to cover the cost of the processing fees. So if you want to donate with a credit card — maybe you want to earn rewards on the expense, but you want the charity to get the full donation — consider paying the processing fees, if the charity has that option.
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Donating credit card rewards
Another way to bypass credit card processing fees is to donate credit card rewards.
Many credit card issuers, frequent-flyer programs and hotel loyalty programs let you donate your points or miles. For example, on certain Citi credit cards, one ThankYou Point is worth 1 cent when redeemed for a charitable donation. However, depending on your credit card issuer and the charity, the value of your rewards may be less than that.
You could also redeem rewards for cash — for many credit cards, this option results in that ideal 1 cent per point value — then turn around and give that cash to a charity of your choice. Donating in this way also allows you to deduct your donation on your tax return, which isn’t possible when you donate credit card rewards directly to the charity.
