If you’re looking for a simpler way to donate your card rewards to charity, a socially responsible credit card such as Commerce Bank’s new Charity Charge credit card may be the ticket. But if you want to maximize your giving and get more value out of each dip or swipe of your card, you may be better off sticking to a higher earning rewards card and donating those rewards yourself.
A simpler way to give
On June 21, the Austin, Texas-based startup Charity Charge announced it was partnering with Commerce Bank and MasterCard on a new, socially conscious credit card that directly contributes 1 percent of every dollar you spend to up to three nonprofits of your choice. The new card is similar to the Halo card, which launched in 2013 and also gives 1 percent of every dollar spent to a favorite nonprofit. It’s also like the now-defunct Take Charge of Education program from the Target RED card, which, until May 2016, donated 1 percent of every transaction to U.S. schools.
A dwindling number of affinity cards, such as the Pink Ribbon BankAmericard cash rewards card and the World Wildlife Fund card, also let you contribute to the greater good with a minimal amount of effort by donating a percentage of each transaction to a specific nonprofit; but the donations are typically smaller. For example, the Pink Ribbon card gives only 0.08 percent of each transaction to the breast cancer advocacy group Susan G. Komen. The World Wildlife card is only slightly more generous: it gives 0.25 percent of every purchase.
For cardholders who don’t want to put effort into their giving, charity cards are a reasonable way to modestly boost donations. Rather than set aside time to write a check, input your credit card numbers or manually redeem your card rewards for charity, you can simply outsource the job to your credit card issuer, which will automatically donate money each time you use your card.
However, judging by the number of charity cards that have been discontinued in recent years, including the CREDO credit card, the Sustain:Green Mastercard and Target’s Take Charge of Education program, socially responsible cards don’t appear to be especially popular – perhaps because many charity-minded cardholders have realized that to maximize their giving, they’re often better off sticking with a higher-earning card.
If you care more about impact than convenience, you can make your dollar stretch further by opting for a more generous rewards card and then manually donating those rewards.
Many of the biggest card issuers have made it easy to redeem rewards for charitable donations by setting up online portals or partnering with third-party donation sites where you can directly donate your rewards points. For example:
- American Express cardholders can choose from more than 1 million nonprofits affiliated with the issuer’s Members Give program.
- Citi cardholders can donate their ThankYou points to any nonprofit that’s signed up with the organization.
If you want to get more value from your spending and donate a larger amount of cash, choose a card that offers a high rewards rate for general spending or offers ample bonuses for purchases you frequently make. For example, the Citi Double Cash card offers 2 percent cash back on every dollar you spend when you pay off all your purchases. Meanwhile, the American Express Blue Cash Everyday card offers 3 points for every dollar you spend on groceries and 2 points for every dollar spent on gas and department store purchases.
The new Charity Charge card, by contrast, gives only 1 percent of every dollar you spend – well below what many major rewards cards offer – and doesn’t offer any other bonuses. To its credit, Charity Charge waives the transaction fee that nonprofits typically have to pay when you make a credit card donation, so 100 percent of your donation will go to the charity of your choice. But other card rewards donation programs, such as Capital One’s No Hassle Giving, also waive this transaction fee.
Your bottom line
It may feel good to a flash a charity card and broadcast to the world that you care about philanthropic causes. But if you really want to get more charitable bang for your buck, skip the low-earning charity cards and shop around for juicier rewards.