Christmas giving begins with your credit card!

Charity credit cards are an easy way to give to your favourite good cause. They work by giving a donation to the nominated charity when you sign up, and then a percentage of what you spend on your card after that. In effect, you make a charitable donation every time you buy something. Among the major issuers are Halifax and Bank of Scotland, the Co-operative Bank and MBNA.

Charity cards used to be considered a bit of a poor deal by people aiming to make the most out of their card. When the going rate for a cashback credit card was a 1% or bigger rebate on your shopping, you could do better by handing over your end-of-year cash reward to your chosen charity in one go and if you made the donation under the Gift Aid scheme you could increase the amount handed over by 28%.

However, the rate on cashback cards has plummeted in recent months, and deals above 1% are usually confined to introductory offers. Many cards, such as Nationwide, Mint and Alliance & Leicester, have slashed their rates or abolished them altogether. Additionally, it was always a bit of a nuisance to have to hand over the charity cash at the end of the year, and more than a little tempting to put it towards an iPod or another pair of shoes, or simply to see it swallowed up in the next credit card bill.

Hence the revival of interest in charity credit cards. If you usually, or even sometimes, don't clear your balance every month, then your first consideration, when choosing a credit card, should be the interest rate. Some charity cards have higher-than-average interest rates, and avoiding undue interest payments should be a priority. You might be better off choosing a different card. However, if you do clear your balance each month, a card giving a donation to charity each time you spend is a painless way to raise funds for your favourite good cause.

Andrew Hagger, of data provider Moneyfacts, says, "There is a wide range of charity-related credit cards on the market, enabling the consumer to use a card linked to the charity of their choice."

Choose the charity or choose the card...

Co-op Bank, for example, offers 19 different charity credit cards, including ActionAid, Christian Aid, Help the Aged, Oxfam, Save the Children, the Terrence Higgins Trust and WaterAid. Oxfam's card is one of the most popular. The Co-op Bank donates £15 to the charity for each new account opened, and a further £2.50 if the account is used within six months. In addition, 25p is donated for every £100 spent on the card or transferred from another card.

The Barclaycard Charity Card gives an initial £5 to the Charities Aid Foundation, followed by a further 3% of the amount spent on the card. These donations are divided equally between Marie Curie Cancer Care, Save the Children, Samaritans and the Woodland Trust.

HSBC's Artscard benefits 80 arts organisations, contributing an initial £10 to the arts organisation of your choice from a list that includes the Royal Shakespeare Company, the CBSO, the Northern Ballet and the Tate Gallery, and then 25p for every £100 you spend. HSBC also issues cards through its Beneficial brand that benefit English Heritage, the Kennel Club Charitable Trust and the RSPCA.

One of the most generous cards in terms of donations is Nationwide's Comic Relief card, which makes a one-off donation of £5.50 to the charity when you first take the card out, and gives a further munificent 50p to Comic Relief for every £100 you spend.

Among other leading charity credit card issuers are Royal Bank of Scotland, which offers cards for the Lifeboats and the Woodland Trust; and Halifax Bank of Scotland. Halifax cards benefit Cancer Research, Mencap and the NSPCC. You can get the same cards with the Bank of Scotland brand, and there are additional Bank of Scotland cards which benefit the Blue Cross, British Red Cross, CRUK, Diabetes UK, Dogs' Home Battersea, Dogs' Trust, Great Ormond Street, Macmillan Cancer Relief, Lepra, Marie Curie, NSPCC, National Childbirth Trust, Royal Horticultural Society, and the St Tiggywinkle's hedgehog charity.

A full list can be found on www.charitycard.co.uk.

MBNA issues nearly 900 credit cards for affinity groups and charities, including Breakthrough Breast Cancer and the British Heart Foundation. Initial donations and subsequent payments to the charities vary, but the BHF receives £25 when the account is opened, then 35p per for every £100 spent on the card. Other cards issued by MBNA benefit ChildLine, the National Aids Trust, the PDSA, Sargent Cancer Care, the National Trust, Unicef and the WWF.

One word of warning, however: MBNA has started to impose an annual charge on cards that benefit smaller charities. It has already begun charging fees of up to £25 a year, money that might be better spent on a direct donation to the charity plus Gift Aid for all but the most profligate spenders. Larger organisations offering MBNA cards, such as the National Trust, have so far managed to avoid having their members charged, but if you are considering taking out an MBNA card it is worth asking whether any fees will be payable.

13 December 2005 © Moneyextra.com

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