How generous are charity credit cards?

Charity credit cards should be a straightforwardly good thing: a way of giving to causes that are in desperate need of cash simply by changing the card you use to pay.

But charity credit cards are actually distinctly, even somewhat insultingly, uncharitable.

In this guide we take a look at just how little they give to good causes, particularly in comparison to their nearest equivalent, cash back cards.

How charitable?

The rates charity credit cards give back to causes vary but typically they'll give some pennies for every £100 spent on the card.

Often they also give a lump sum when the cardholder makes their first purchase or pay a small amount each year for as long the account is active.

Here are some examples of how that could break down in terms of actual money given to the charitable cause.

Particularly for big spenders and in the first year in some cases, then, charity credit cards actually seem pretty charitable.

The problem is comparing the amount cardholders give here with what they could be giving with a cash back credit card.

We go into this in more detail below but, aside from anything else, cash back has had a bit of a renaissance in the past year or so while charity credit cards only seem to have declined in popularity.

It's therefore much harder than it once was to give to your favourite cause through a branded credit card and much easier to take advantage of a cash back deal to give more.

Another problem: Gift Aid

On top of this, giving your cash back directly to charity means that your chosen cause can benefit from Gift Aid.

Gift Aid is a government scheme which allows charities to reclaim the basic rate of tax on donations from UK taxpayers.

By just checking the Gift Aid box when making a donation and possibly filling out an address box, Gift Aiders give:

• £1.28 for every £1
• £640 for every £500
• £960 for every £750
• £1,920 for every £1,500

In addition to this, higher rate taxpayers can reclaim their own tax on the donations by ticking the box on self assessment tax forms.

That'll give the charity an extra 25p for every pound (£1.53 to £1).

Cash back vs charity

All in all, we've established that charity credit cards aren't the best way to give.

But how much better are cash back credit cards?

Let's say that 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 £2,000 purchase on a charity credit card that donates £30 to The National Trust every time you use it for £100 of purchases.

The hedgehogs would get £6, barely enough for a spine scarf (or whatever it is that hedgehogs need).

Make that same purchase with a market-leading cash back credit card, though, and you could expect to earn cash back at a rate of about 2% or £40 which could go on hedgehog supplies.

Get that conservatory during a cash back credit card's bonus period and you could even earn up to 5% or £100 for hedgehogs.

Ease vs generosity

At the end of the day, the cash back route does take more effort when specialist charity credit cards will do all the donating legwork for you.

However, we think the figures speak for themselves: cash back credit cards are also a great way to give money you otherwise wouldn't have been able to spare and using them only requires a little more effort.

Other concerns when giving with credit cards

However, despite the obvious benefits of giving with credit cards, cash back or charity, there are some risks involved too.

Like all forms of credit card rewards both deals are only beneficial when holders can pay off in full at the end of every month.

Without making full repayments the amount cardholders lose in interest will far outweigh the amount they're able to give.