Are charity credit cards the best way to give back this festive season?

Charity credit cards allow you to give to charity when you spend. But are they the best way to give back? Or could other options be better?

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Christmas is just around the corner, which means that charities across the UK are preparing for a significant increase in donations. In 2018, around 36% of the population gave to charity over the Christmas period. One way that some people choose to donate is by using charity credit cards.

These cards may have lost popularity in recent years, but cards such as the Charity Charge World Mastercard continue to promote charitable spending.

Despite their recent slump, are charity credit cards a good way to give back this festive season? Here’s everything that you need to know about them so that you can decide for yourself!

What are charity credit cards?

Charity credit cards allow you to donate your rewards or money to a chosen charity, instead of keeping them for yourself.

There are many types of charity credit cards available that support a range of organisations across the UK. Most cards will be branded with the charity logo to symbolise the organisation that they support. This makes it easy to choose a card that supports a charity you believe in.

Like other types of credit cards, you must meet eligibility criteria to be able to use a charity credit card. These cards also come with the same interest risks as other types of credit cards and will impact your overall credit score in the same way.

How do charity credit cards work?

Most charity credit cards donate to charity every time that you spend. Usually, the amount donated is a fixed percentage of whatever you spend, but some cards make lump sum donations once the card has been approved.

Most charity credit cards also allow you to donate your credit rewards to the supported charity. You can donate rewards through the credit card app or by calling up your credit card provider and asking to donate.

What are the pros of these cards?

The main benefit of using a charity credit card is that donations are automatic. This eliminates the barrier of remembering to donate and ensures that your chosen charity receives regular donations. All you have to do is spend and the credit card provider will do the donating for you.

A recent study of 1,000 adults found that 40% had forgotten to donate to charity and three in 10 didn’t have the time. Charity credit cards tackle this problem through automatic donation. It means that charities can receive money that would otherwise have been forgotten.

What are the cons?

While charity credit cards may sound like a great way to give back, the amount donated by the provider is often very low. Most cards donate around 0.25%. This means that you would have to spend £100 to donate just 25p to charity!

As well as this, most charity credit cards come with high-interest rates. Consequently, the amount that holders pay in interest is often higher than the amount that is donated to charity.

Should you get a charity credit card this Christmas?

If you regularly make charitable promises that you then forget, then a charity credit card may be a good way to give back this Christmas. However, to make a considerable donation to the charity, your spendings will have to be high!

For this reason, it may be worth considering some alternative methods of charitable giving. Many rewards and cashback credit cards allow you to build up a balance that can then be donated to charity. This could be a more effective way of making a donation.

You could also consider setting up a monthly direct debit with the charity you wish to support. Many charities are open to recurring monthly donations and some will even have existing subscription schemes in place.

The high interest rate of most charity credit cards means that it is easy to build up debt. Always consider this risk before applying and ensure that you are able to pay back the money that you spend before using the card.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

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