Charity cards are fun to carry, much like having personalized cheques.  Instead of being “Joe Boring” like everybody else, whipping out that charity card shows the world that you care about something.  So how do they work?

How Do Charity Credit Cards Work?
Charity credit cards work a few different ways.  Here are the most popular programs:

* The credit card let you donate your rewards to a selected charity.
* The credit card donates a “purchase price” to the charity when you “buy” the credit card.
* The credit card company donates a certain percent of your charges to the target charity.

Benefits to Charity Credit Cards
Why would you carry a charity credit card instead of donating directly to the charity?

* One way charity credit cards work is that they communicate that the cardholder cares about this charity.  Like a slogan t-shirt, this advertisement can open conversations about the charity between the cardholder and people they come into contact with when using the card. Obviously, this does not hold true when the cardholder is using their card to make purchases online.

* The other way is that your donations to the charity happen without you having to worry about it too much.  As long as you are charging to your card, money is being donated to your charity.  If you are the type that never gets around to half the stuff you want to do, this is a way to sign up once and not worry about it.

* If you have limited funds but would like to find a way to donate, here is a way to stretch your giving.

Are Charity Cards Worth It?
The following limitations exist with charity credit cards:

* One problem with charity credit cards is that you cannot count the amount donated as charitable giving.  If you were to use a cash back reward credit card, and then donated that cash directly yourself, you would be able to count that as charitable giving for tax purposes.

* The other problem is that if you end up not charging much to your credit card, there is a trickle down effect with how much ends up donated to your charity.

* In the case where the credit card company donates a percent of your purchases, the percentage is often VERY low. Some of the best ones will donate as much as 1% of your purchases.  Most cards, however, will only donate .25% to .50% of your charges.  No matter how much you charge, that does not add up to much.

* The APRs on these charity credit cards are often not very charitable to you, the cardholder. If you plan to carry a balance on your card, you might be better off getting one with a lower APR and then donating the difference in finance charges directly to the charity of your choice. 
 


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