Normally when you donate to a charity, they will benefit a lot more from your donation, if you donate it directly. However the actual worth of the amount donated is much more to the charity. But it misses the point of using a charity credit card. When you pay for your purchases through a charity card, there is no change in the price of your purchases. However some portion of this money spent is given to the charity of your choice.
If you spend £10,000 on the AMEX Red Card, £117.50 is donated to charity. But if you donate the same amount to charity under the appropriate scheme, it is worth about £200 to the charity, without the need to spend any money. However, it is a backwards way of looking at things. Let us see how.
First thing, most people won’t spend £10,000 on the card. Now assume you spend £200 in groceries each month and repay the amount in full every month. The AMEX charity credit card donates at the rate of one penny per pound spent, so your charity gets £2 a month, without having to spend additional £2 a month. There is no increase in the price of your groceries, but you won’t think about donating a measly £2 a month to the charity. However, £2 a month works out to about £25 annually. Now if a lot of people do the same thing, there is an exponential increase in the amount going to charity.
Does the credit card company earn profit? Yes. They capitalize on natural human desire of benevolence to increase their own market share, and thus raking in more moolah, while donating a portion of it.
How does it help you? Spend time to compare all the options with the present manner of your shopping and check if you have to pay more for your normal purchases. Also compare credit cards to get the best rates and check if the money saved will help you in making the donations.
Does the charity benefit? Actually the charities that benefit get thousands in donations that would not have been otherwise possible. Barclaycard in 2004 alone contributed around £380,000. So when you compare and select a charity credit card, you exercising your right of direct donations to one of the various charities, with an amount you would normally consider insignificant. You can visit a good comparison website to get the best deals listed and simple applications for some of the best credit card offers in the UK.