Throw charity credit cards a lifeline

In January, Bank of Scotland and Halifax, both part of Lloyds Banking Group, announced they’d be scrapping charity credit cards.

These work by donating a small proportion of everything you spend on the card. While they don’t raise much for charity, more should’ve been done to boost their value.

Paltry amounts donated to charity

One of the cards, launched in 1998 for donations to Cancer Research UK, has raised £14.5m in its lifetime. Though this may sound like a worthy sum, when you put it in the context of the £433m which Cancer Research received in 2010/11 alone, it’s clear that credit card donations have had little impact on charities’ finances over the past few years.

It’s not hard to see why. Most charity credit cards donate a tiny percentage of the total spent to charities, often just 0.25%. So, spending £200 on your credit card donates just 50p to charity.

On the assumption that only 0.25% is donated to charity through using these cards, that amounts to about £5.8m – next to nothing compared with the £56bn that was donated to all charities in 2010.

Don’t scrap charity credit cards – reinvigorate them

Although at Which? we’ve always taken the view that you’d be better off taking out a Best Rate cashback credit card and donating the money directly to the charity of your choice, it’s easy to understand the attraction of charity credit cards. They offer both the convenience and satisfaction of knowing that you’re making a donation every time you spend.

Rather than scrapping them altogether, it would be more encouraging to see Lloyds exploring ways to make the donations more generous, thus reinvigorating this niche market.

But as long as charity credit cards remain in their current sorry state, you’d be better off donating in other, more tax-efficient ways, such as payroll giving. And, when it comes to credit cards, stick to a good cashback card.

Have you ever had a charity credit card or would you get one if you thought they really helped a good cause?