Charity credit cards, a subset of affinity credit cards, are a way to show support for your most valued causes every time you make a purchase. Most automatically donate a percentage of the purchase amount to the associated organization; some will give an extra donation for new accounts opened or other benchmarks. There are charity credit cards for many major organizations, from the World Wildlife Fund to the Susan G. Komen Foundation to various alumni organizations. But are they the best way to give back?
The benefits of using a charity credit card
If you know you want to donate to a specific organization, a charity credit card can help you donate a little each day. Especially if you find yourself forgetting to make your annual donations, automatic giving can help you stick to your altruistic impulses.
The case for just donating your regular rewards
On the other hand, there are plenty of reasons to just stick with a regular rewards credit card and make an extra cash donation instead. First, while automatic giving can be a good supplement to planned giving, it’s not enough on its own: Even if you spend $20,000 on a charity card that gives 0.5% in donations, that adds up to just $100 donated, far below the average charitable donation of $1,872. It’s easy to be lulled into the sense that simply using a charity card is enough.
Second, you don’t get any tax benefits from using a charity card, even though you’re giving up cash back in order to donate. If you write a check from your bank account, you can claim it as a deduction on your tax returns, but the automatic donations from charity credit cards are not deductible.
And finally, you give up a lot of flexibility by tying yourself to one charity. Many banks, including Chase, Citibank and others, allow you to donate your earned rewards to a wide variety of charities and to claim a tax deduction. Discover Giving, for example, partners with JustGive to facilitate donations to over 1.5 million organizations. And, of course, there’s always the option of maximizing your rewards, and donating those to charity on your own time. This is arguably the best strategy from the charity’s standpoint: Your contribution is larger if you earn and donate 2% than if you give 0.5% automatically.
Charity credit cards can help you boost your annual giving without having to think about it, and sometimes, automatic donations are exactly what we need to stay on track. They aren’t right for everyone, though, and you can make a valuable contribution even with a regular old rewards card.