Charity credit cards are gaining widespread popularity in recent years, because people are enamored with the thought of supporting their preferred charities at obviously no additional cost to themselves. When you opt for one of these cards, a one-time small donation is made by the card issuer to the charity associated with the card, and subsequently a small percentage of your expenses on the card is donated by the card issuer instead of the cardholder.
Cards available today cover big range of charitable organizations, both local and national and at times, even international. So you can be sure there will be at least one charity supporting your favorite cause.
At first glance, this scenario looks like a win-win situation for all involved, but the situation is not as straightforward as that. The first disadvantage of a charity card is that the interest rates, balance transfer offers, and other deals are not as good as those for the cards that feature under ‘best buy’ card. You may think it is a price to be paid for helping your favorite charity. But the fact remains that you can make big savings by using a cheaper card and donating money saved directly to the charity.
Even if you tend to ignore the higher interest charges, charity cards have another disadvantage – the percentage of your spending that goes to the charity is minuscule, roughly 0.25%. As against this, a normal cashback card pays 1%-2% of your spending, so you can easily see that the card issuer offers pittance to the charity. If you donate the saved cashback directly to your preferred charity you can make a big effect.
Also remember when charities get money from the credit card companies, they are taxed unlike normal donations, thus reducing its value.
You may think after all this, charity cards are a waste of time. Though the actual money donated may give this impression, there are other benefits to the charity involved besides the money donated. First, when you use your card you’re promoting your preferred charity, when you hand over the card for swiping. This act will make others aware about the charity you support.
Also the charity is assured they will get the donations, no matter how small the amount. If you save your cashback with the goal of donating it, the likelihood that you will use the money saved for some other urgent need instead of donating it, is quite high.
Finally and crucially, the big marketing and advertising resources of the card issuer are used for promoting the card and to smaller extent, the charity. So the total number of people donating will rise, though the individual contributions are small and the charity gets more publicity.
Tags: Charity, Charity Credit Cards