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How to Donate Credit Card Points, Miles or Cash Back to Charity

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Forgotten loyalty accounts, unused sign-up bonuses, cobweb-covered miles. The ghosts of credit cards past might be a downer for you, but donating unused rewards to charity could help those in need — and might even keep the rest of your points and miles from expiring.

Donations of frequent-flier miles are a “critical, budget-relieving resource for the Make-A-Wish Foundation, says Josh deBerge, the foundation’s director of public relations. The charity grants wishes for children with life-threatening medical conditions. “We grant 15,000 wishes each year with tens of thousands of wish participants, so airline travel is our largest expense as an organization.”

Donating rewards and perks that might otherwise go to waste is a painless way to help out organizations like Make-A-Wish. About one-third of earned loyalty rewards — worth $16 billion! — weren’t redeemed in 2011, according to the most recent data available from Colloquy, a loyalty marketing research firm.

How it works

These days, most airline, hotel and issuer loyalty programs let you donate miles, points and cash back to charity with just a few clicks. Programs that allow donations are listed in the next section. Here’s how you can contribute:

  1. Go to your loyalty program’s charity page and log in to your account. 
  2. Select a charity. Most programs let you donate to big-name nonprofits, such as the Red Cross, the Make-A-Wish Foundation and UNICEF. Others are more specialized. Hawaiian Airlines, for example, offers a selection of Hawaii-based charities.
  3. Indicate how many points or miles or how much cash back you want to donate. Generally, rewards will be deducted from your balance right away, and you’ll get a confirmation email from your loyalty program or the charity.

Loyalty programs usually count donations as “account activity.” That means that if your points or miles are due to expire because of inactivity, a small donation could restart the clock. If you’ve been sitting on a mother lode of miles because you’re waiting for a sweet flight deal, making a mileage donation could keep those miles active.

» MORE:  The best ways to donate to charity

Where you can donate

To donate rewards, go to the website where you’d normally redeem them. If you have a co-branded airline card, for example, go to the airline’s website to donate, not the card issuer’s website. Here’s where you can give, based on the types of rewards you’ve earned.

 

What does the charity get, exactly?

You might think that if you donate 5,000 points, the charity will get 5,000 points — right? Well, not necessarily. It depends on your loyalty program and the charity.

Charities usually receive rewards donations in one of two ways:

  • Travel credit: Your charity might use your points or miles to cover a plane trip or hotel stay for one of its beneficiaries. For example, Fisher House, a nonprofit that supports military families, uses donated airline miles and hotel points to cover travel for wounded, injured or ill service members and their families.
  • Cash value: In some cases, your issuer might convert your points or miles into cash before sending it to the charity. The amount donated depends on the redemption value. With American Express, for example, the charity you choose would get 1 cent per point for the first 500,000 points you donate in a calendar year. After that, it would get 5 cents per point.

Most nonprofit websites clearly explain how they use point and mile donations. If you have any questions, you can always give them a call and get more information.

The fine print

Hypothetically, donating your rewards is simple: You find a good charity, unload your points, miles or cash back, and go about your business with a smile on your face. But there are a few other important things to know beforehand:

Donations aren’t tax-deductible. The IRS generally views credit card rewards as discounts, not income. So even if you earned thousands of dollars’ worth of credit card sign-up bonuses this year, Uncle Sam wouldn’t ask for a cut. The downside: You typically can’t claim a deduction for donating those rewards. However, you could get a tax deduction if you redeemed your rewards for cash back and used that money to make a separate donation.

Contributions are irreversible. For the most part, points and miles donations are final. So before you fork over your entire rewards balance, make sure you’ve thought things through.

Rewards can have low redemption values. If your issuer converts your rewards to dollars for donations, your gift might become less valuable. For example, Hilton HHonors points usually are worth about 0.5 cent each, according to NerdWallet valuations. But when you donate them, the charity gets only 0.25 cent per point, cutting their value in half.

A low redemption value doesn’t have to be a deal breaker. A small donation is better than no donation, right? But if you want to make a bigger difference, consider making an additional cash donation or signing up to volunteer with the organization. The charity will appreciate the extra support.

Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email: claire@nerdwallet.com. Twitter: @ideclaire7.