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Let your spending benefit others
Many charities rely on donations from the public, and even the smallest regular donations can go a long way to helping these charities to provide valuable services and assistance to those in need.
Q. Where do the funds come from?
A. If you have a charity credit card you may wonder where the actual money comes from to fund the donations, particularly if you repay your balance in full each month and therefore do not have to pay any interest to the credit card company.
Q. What are the different reward schemes available on credit cards?
A. There are a number of rewards schemes available on credit cards in the UK these days, including schemes such as cash back, retailer loyalty points and discounts, travel rewards, air miles and charity donations.
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Charity credit card donations are funded by the issuing bank or building society.
Charity credit card donations won’t cost you an extra penny – and all you need to do is spend on the card as you would any other and the named charity will receive a percentage of your total spend funded by the card issuer.
Charity credit cards...
Charity credit cards are ideal for anyone who wants to give a little something back by contributing to a worthwhile cause, as they enable you to do this without having to take any action other than to use your credit card in the usual way.
Some of the charities that can benefit from a charity credit card include:
How do charity credit cards work?
Charity based credit cards work pretty simply – in short the more you use your credit card and the longer you keep the card, the more money the charity will receive by way of donations.
Credit card companies are part of a very competitive area at the moment, and these companies use a range of incentives to get customers on board.
One of these 'joining incentives' is to team up with various charities to give the charity the opportunity to earn more money in the way of donations, and give the customer the chance to make worthwhile contributions with ease and convenience.
Who funds the donations?
Charity credit cards work in a similar fashion to cash back credit cards, except instead of the money earned being paid to you – it gets paid to the named charity instead.
Just like cash back cards it is still the credit card company who actually pays for the donation – the actual amount donated being determined by how much you spend - as a percentage of the purchases made on the card are donated to the named charity.
Where does the money come from?
As anyone who has ever used credit knows, banks aren't charities and as faceless corporations they rarely – if ever – give away their money for nothing!
Sadly, credit card companies wouldn't run charity credit cards if they weren't making something out of it themselves.
However, that's not to say the charities involved don’t benefit at all – they do - and when you have to bank with at least one faceless corporation – you may as well be banking with the one who’s at least trying to give something back.
So if credit card companies really are as money-orientated as they seem to be – where do the charity funds come from?
In reality it's actually the retailers and companies you spend money with who have to cough up the dough. Whenever you buy something with a credit card the shop or service provider accepted your credit card payment has to pay your credit card company a fee.
It's this fee that creates the profits used to fund any credit card reward scheme – including cash back and charity donations.
The fee charged to retailers and companies is charged regardless of whether you are paying with a standard, reward or charity credit card – so using a charity credit card won't inflate prices!
How much do charity credit cards donate?
The donations made to charity can vary based on the charity credit card that you opt for.
Most charity credit card issuers will donate around £5 - £15 – to the charity once a customer successfully opens an account, and sometimes an additional donation for each year the account remains open.
Although these amount do not seem very high, with thousands of people opening credit card accounts every day they can soon add up.
The credit card companies then donate a certain percentage per £100 spent on the card to the charity – this can be anything from 25 pence to £1 per £100 spent.
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