How to Compare Charity Credit Cards: part 2
Charity Credit Card
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Charity Credit Card FAQ's
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Charity credit cards allow you to earn donations for a charity just by spending on the card. The donations don't cost you anything, as they are funded by the issuing bank or building society.
Comparing charity credit cards is fairly straightforward in the terms that you would simply be looking for a charity you want to support.
However, as a financial product there are other factors to take into consideration and this section aims to help you know what to look for when you compare charity credit cards.
What to look for...
- Your chosen charity
The first thing to look at when comparing charity credit cards is to decide which charity you would most like to support.
Charity credit cards are usually branded by the charity they work with, so it's easy to see which card is working with which charity.
There are also charity credit cards that work in association with more than one charity, so the donations you earn are split between a range of different charities. These charity credit cards are a good option if you want your card spending to be helping more than one charity.
The charities that have set up associated charity credit cards include the RED - the Global Fund, Cool Earth, Pure - the Clean Planet Trust, WWF, British Heart Foundation, Breakthrough Breast Cancer and The National Trust.
- Introductory rate offers
As you'll be spending on the charity credit card to earn donations, if you're pulled between a couple of different charity credit cards you may want to look and see which cards offer introductory rate offers.
Introductory rate offers, such as 0% purchase deals, are joining incentives that can really be used to your advantage.
If you have a large purchase, or several large purchases to make in the near future, a charity credit card offering a 0% purchase deal could allow you to effectively buy now, and pay later - you'll earn charity donations on the spend, whilst still being able to repay the balance slowly without being charged interest.
- The standard interest rate
The standard interest rate is how much you will be charged on spending that you don't manage to repay each month.
Whilst this may not be a primary deciding factor - because charity credit card spending really should be paid off in full each month to really benefit from the earned donations - the standard interest rate is still a very important financial consideration.
The standard interest rate is quoted as part of the APR. The APR is the annual percentage rate and includes the purchase interest rate per annum plus any annual fee if applicable.
- Shiny platinum or understated classic?
Charity credit cards are often available as both platinum or classic credit cards, so even once you've decided on the charity you would like to support you may still have the option between the two types of card.
Platinum credit cards often offer exclusive platinum cardholder benefits and features, including a host of free services that will work to keep you, your money and your purchases safe and secure.
Platinum credit cards usually require applicants to have a good credit rating and a good salary. The actual requirements do vary between cards, so you should check before you apply.
Classic charity credit cards will still donate the same amount of money to charity on your spending. They also still offer a number of free cardholder services too.
It is generally easier to be accepted for a classic credit card, but you will still need to have a good credit history and a regular income - so check the application requirements listed at the start of the online application form.
What to watch out for...
- Balance transfers
If you currently have an outstanding balance on your credit card you may be looking to transfer it to a charity credit card - and many charity credit cards do offer good 0% balance transfer deals.
However, it's important to bear in mind that if you do transfer a balance over to a charity credit card, due to the way card issuers allocate payments made to your account; it may not be suitable for spending on too.
The 'allocation of payments' clause generally lists lower rate balance first, so payments will always go first towards repaying 0% deals - such as a balance transfer - before any new purchases.
This clause can mean that new purchases become trapped behind cheaper balance transfers, and they can incur interest charges whilst you are still repaying your balance transfer.
Because of this, you should either wait until your balance transfer is repaid before spending on a charity credit card, or use a separate 0% balance transfer credit card for your current debt, and make new purchases on a charity credit card to earn donations for your chosen charity.
- Cash withdrawals and foreign currency
Cash transactions generally incur higher rates of interest and handling fees when made with a credit card. They are rarely included in the card's interest free period, so even if you repay your balance in full each month, you will still have to pay interest from the date of transaction until repaid in full.
These extra charges can reduce the 'freeness' of earning charity donations on your spending, so if possible you should always try and use your debit card for accessing cash.
Remember, cash transactions can cover ATM withdrawals, getting 'cash back' at the supermarket, buying foreign currency or traveller's cheques and also gambling transactions.
Don't forget!
- To repay your spending
The best way to use any reward-based credit card is to spend freely and repay diligently.
Charity credit cards, where possible, should be used for all your everyday spending and larger purchases too - to really increase the donations you are earning - but they should also be repaid in full each month, otherwise you'll be paying the bank more money in interest charges than the bank is paying the charity in donations.
Remember to budget your income and try to always clear your charity credit card balance in full each month. You can always set up a direct debit to pay the full outstanding balance each month, or use Internet banking to keep abreast of your spending and repayments.
- What card usage will, and won't, earn donations
Lastly, remember that not all credit card usage will earn donations for your charity
Purchases, that is buying goods or services from retailers or companies will earn your charity donations.
Cash transactions (withdrawals, foreign currency, etc.) or balance transfers won't earn your charity any donations.
So spend freely on your charity credit card - remembering to budget your income to repay the purchases - use your debit card for cash, and if applicable get a separate 0% balance transfer credit card for any current outstanding card debts.
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