Charity cards have the same features as conventional credit cards, besides serving a charitable cause. Charity credit cards are designed such that whenever a purchase is made using them, a certain percentage of the amount is donated to a specific charity. This charitable organization and the percentage of contribution are established by the card issuer.
Charity Cards: Benefits
Charity cards have the following advantages:
- Automatic setup: The donation can be automatically set up to an individual’s favorite charity, without the need to approach the organization directly and follow a lengthy payment setup procedure. Moreover, most charity credit card issuers match the cardholder’s contribution, thereby doubling the value of the donation.
- Low APR: Charity cards have lower APR rates than standard credit cards, usually around 17%.
- Rebates: Some charity cards facilitate discounts and rebates at the partner stores of the issuer. Additionally, some cards offer reward points that can be redeemed for gift cards and merchandises.
Charity Credit Cards: Limitations
Some drawbacks of a charity card are:
- High interest rates: Though the APR is lower than standard credit cards, there are others, such as the life balance APR credit card, which have even lower APRs.
- Low donations: The amount contributed to a charity tends to be very low, which is usually just 0.25% to 1.25% of the amount spent with the card.
- Transfer fees: Most charity credit cards offer a zero balance transfer rate. However, these cards typically charge a transfer fee, which can either be a fixed amount or a percentage of the card balance, generally around 3%.
Moreover, most charity cards charge an annual fee and offer less incentives than a regular ‘miles’ or ‘cashback’ rewards credit card.
Charity cards are offered by different credit card issuers in conjunction with a large number of charities and organizations. In the US, most charity credit cards are operated by MBNA. The cards come in different categories, such as environmental conservation, animal protection, health education and gender equality.
Some of the most popular charity cards are the RSPCA card and the American Express Red card. The former donates 0.25% to animal charity, while the latter donates up to 1.25% to support the fight against disease and poverty in Africa.
Finally, keep in mind that the best way to help a charity is to make an outright donation to them with a charity card.