Cash back vs. Charity credit cards: How to give more with your credit card

By Neil Hawkins Senior Staff Writer Friday, 10 July 2009

Best Cash Back Credit Card American Express Platinum Cashback Credit Card: 5% cash back for 3 months (up to £4000 spend) 0.5% cash back on aggregated spend up to £3,500 1% cash back on aggregated spend from £3,501 to £10,000 1.5% cash back on aggregated spend in excess of £10,001 18.9% APR (typical variable) Read our review of American Express Platinum Cashback credit card. Related Personal Finance Features and News See our other recent related news stories: Cash back credit cards: A beginner’s guide Find out if you could beat the credit card companies and get paid for your spending with Julia Kukiewicz's guide to cash back credit cards. Who gets you flying the furthest: BA, AirMiles or Tesco? Tesco Clubcard points can be converted into BA Miles or AirMiles™ and at a not too shabby rate either. With the Tesco Clubcard credit card offering 5 Clubcard points for each £4 spent at Tesco - it begs the question as to whether or not it's more lucrative to spend on a Tesco branded credit card over an airline one. Maximise Your Chances of Getting a Credit Card If you have been turned down for a credit card then you'll want to know why ... and what you can do to maximise your chances of being accepted next time. Mark Lewin explains how. Choose guide to Section 75 of the Consumer Credit Act Section 75 of the Consumer Credit Act gives consumers protection and options for redress against their credit card companies and suppliers of goods or services. Read Choose's guide to Section 75 to gain a clearer understanding of what it is and how it can help you, with Claire Stevenson.

CHARITY credit cards are wonderful things, the friendly side of capitalism and a way of getting your card provider to redistribute at least some of their wealth where it's needed.

But did you ever consider that your charity credit card was in fact distinctly uncharitable? A cash back credit card could triple the size of your giving power.

Cash back credit cards boost your donations

Let's illustrate this point with a quick example.

You decide to push ahead with building that conservatory you've dreamed of but the required destruction of 10 square metres of natural hedgehog habitat weighs heavy on your mind.

For the benefit of hedgehogs everywhere you decide to make the £2000 purchase on a charity credit card that donates to The National Trust every time you use it thus aiding the little critters nationwide.

The MBNA National Trust credit card will give a one-off £20 donation when you sign-up plus 30p for every £100 spent on the card to The National Trust which in this case adds up to £26.

The same £2000 spend on the American Express Platinum cashback credit card, however, with its mighty 5% cash back for the first three months, will yield the maximum claim of £100 cash back which you can then pass on to the charity yourself, boosting your donation threefold.

Give more with Gift Aid

On top of this, giving your cash back directly to charity also means that your chosen cause can benefit from Gift Aid, a government scheme which allows charities to reclaim the basic rate of tax on donations from UK taxpayers.

In addition to this, higher rate taxpayers out there can reclaim their own tax on the donation and increase the charitable vibes by donating that too.

Ease vs Generosity

Now, the cash back route may seem like a lot of effort when you consider that the specialist charity cards will do all the donating legwork for you but using a cash back credit card is a great way to give money you otherwise wouldn't have been able to spare.

So which are the best cash back credit cards to use to increase your donating power?

Best cash back credit cards

By far the best cash back credit card available at the moment is the American Express platinum cash back card. It offers a massive 5% cash back on purchases made in the first three months and a minimum 0.5% cash back thereafter, a rate which rises with your spending up to a maximum of 1.5% for spends of over £10,000 a year.

Cash back credit card vs. charity credit card: £10,000 Annual spend comparison.

Things to Remember

Of course, there are other differences which are important to remember when deciding if you should ditch your charity credit card in favour of a cash back credit card.

In our example whilst the Amex cash back card yields a higher return for your chosen charity it doesn’t come with the introductory 0% interest rates for purchases and balance transfers that the MBNA charity credit card does have.

Currently, the 18.9% typical APR for the Amex Platinum cash back card is also higher than the typical 15.9% APR of the MBNA charity credit card.

The cash back Golden Rule

The most important thing to remember when taking out a cash back credit card is to pay it off in full every month.

By setting up a direct debit to clear the balance every month you'll ensure that you don't incur any interest charges which would far outweigh the benefits of any cash back earned.

Conclusion - It's for charity mate

As we've seen, cash back credit cards can give you a much better return than charity credit cards but the balance must be paid off in full each month for the benefit to be maximized.

Remember to also consider other aspects of the card and how you may use it. High paying cash back credit cards usually lack 0% rates for balance transfers or purchases so consider all your options to ensure that your new credit card will work both best for you and for your chosen charity.