Charity Credit Cards Not Always The Best Way To Give

Rewards credit cards, those that provide "points" or other gifts for the user, are nothing new. But charity cards - those that send the reward to a designated charity, are a fairly recent development.

But are they an effective way to give? New findings from Confused.com, a British website that investigates consumer offers, reveal that charity credit cards may not be as "giving" as customers think.

After analyzing the rewards given on 45 of the UK's top charity credit cards Confused.com found that those wishing to be charitable could provide greater support by ditching their charity card and replacing it with a cash-back reward card instead, potentially earning up to three times as much cash which can then be donated to a charity of the cardholder's choice.

In the U.S. charity, or "cause" credit cards operate in much the same way, automatically donating a portion of each transaction to the charity linked to the card. Some are branded with the organization, like Bank of America's American Heart Association and Chase's World Wildlife Fund  cards; others allow you to steer the donation to the cause of your choice.

The British findings are all the more relevant since charitable giving in 2009 was 11 percent lower than 2008 according to the Charities Aid Foundation, in large part a result of the tougher economic climate.  

With 45 charity credit cards currently available, accounting for 18 percent of the cards on the market, many providers are presenting their products as a way for consumers to support their favorite cause without having to write a check.

However the rewards earned for charities via these charity credit cards are significantly lower than standard reward or cash-back cards, according to the website.

Examples

For example, someone spending freely on the Greenpeace Platinum card from Britain's Cooperative Bank would earn a donation of significantly less than one percent of the annual spending total.  In comparison spending the same amount over a year on an American Express Platinum Cashback card would result in a cash reward of three times that amount, which could go to a good cause.

"Charity credit cards offer the chance to give to a good cause simply by using a designated card ahead of our other plastic when we're shopping," said Chris Griffiths, head of Credit Cards at Confused.com. "While they undoubtedly have honorable intentions, customers may in fact be able to make a bigger contribution by using a traditional cashback card and donating their rewards to the chosen charity themselves."

Griffiths said it isn't clear why the rewards from a "charity" credit card don't measure up to those of a standard rewards card.

"Given that so many providers have corporate social responsibility programmes and extol their own 'green' virtues it would be nice to see them apply the same standards to their charity cards as they do to their best reward cards. Until then it may be better for canny customers to opt for a cashback card and make their own donation."