April 8, 2006

By Peter Kenny

First of all, I realise the title is not the most charitable I could have used, however, if you have an inkling to donate to charity by using your credit card there are better and more beneficial ways to do so.

There are a number of very noble charity currently on offer and they work very simply. For every purchase you make, 0.25% of your transaction is given to the affiliated charity. Sounds great, but we could do more to help charities.

American Express has just launched their Red charity credit card and this card is by far the most generous of the bunch. With the American Express Red credit card 1% of all your purchases is given to Global Fund-financed programs in Africa which positively impact the lives of women and children affected by HIV/AIDS and if you spend more than £5000 the donation is increased to 1.25%.

We can still beat this and here is how.

There is a type of credit card that rewards you every time you spend by giving you a cash back. The size of cash back varies from card to card, from as little as 0.5% to 2% depending on your spending.

If you spent £8000 per annum using an American Express Platinum credit card, you would receive £160* cash back. If you donated this amount to charity you could increase the benefit by stating the amount is for charity on your tax return. The charity then receives an extra £44.80* (subject to your tax status) bringing the total up to £204.80. Now compare this to using an affiliated charity credit card that donates 0.25%, on your spending of £8000 the charity would only receive £20*. Any donations made by a charity credit card do not qualify for tax relief.

Keep in mind to be able to apply for an American Express Platinum credit card you need to be over 21 and earn in excess of £20000 per year. There are other that can be used which I have listed below

One important rule in using a cash back credit card to give to charity is to make sure you pay your outstanding balance every month. This is not worth the trouble if you pay interest on you credit card account.

For a little bit of effort you can multiply your donation to charity tenfold without having to spend more.

Spend £8000 per year