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The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

Tuesday, November 14, 2017

Cash Back for Good: How to Donate Your Credit Card Rewards to Charity


This guest post was written by Ashley Dull, our friend at CardRates.com.

Although cash back rewards are one of the most compelling reasons to use your credit card for everyday purchases, a shocking 31% of cardholders let those rewards sit fallow. With over a billion credit cards in the US alone, and the best cash back credit cards offering up to 5% back, that 31% figure could translate to millions of dollars’ worth of unused rewards going to waste.

Rather than letting those points or miles gather digital dust, some cardholders choose to use their credit card rewards to make a difference — by donating them to a worthy charity.

Donate When You Redeem Your Rewards

In today’s digital era, donating to causes and charities making a positive impact has become remarkably simple, with sites and programs, like Charity Navigator’s Giving Basket, making it easy to donate online from anywhere. But while we may all want to give, it isn’t always easy to find the extra cash in your budget.

Or is it? Unbeknownst to many, one of the easiest ways to donate to your favorite cause is actually through your credit card rewards. Whether you earn cash back, points, or miles, many major issuers give you the ability to donate those rewards directly to a cause of your choosing.

No matter how tight your budget, you can earn credit card rewards simply by making the same everyday purchases you’d already be making. With a massive variety of rewards credit cards out there, nearly anyone can find the perfect card; you can even find unsecured credit cards for bad credit with cash back rewards, meaning no one has to miss out on purchase rewards.

The actual method you use to make your donation will vary based on the individual card issuer. Some issuers may offer a donation option through your usual redemption page, while others may have a separate donation mechanism. For instance, American Express allows cardholders to donate Membership Rewards points through its Members Give site. Cardholders can give to any registered nonprofit, with every 1,000 points equaling a $10 donation to the organization.

Use an Organization-Branded Card to Donate Automatically

As simple as it is to donate online or with your credit card rewards, card issuers have come up with an even easier way to swipe your way to a donation: charity-branded credit cards. Rather than redeeming your cash back or points for a donation, these branded cards automatically donate to your chosen cause with every purchase.

For example, the Bank of America co-branded World Wildlife Fund (WWF) credit card operates just like any other cash back card, even providing bonus cash back for grocery store, wholesale club, and gas station purchases. What makes this card special, however, is that it also provides a flat-rate donation to the WWF of 0.08% for all net retail purchases made with the card, as well as bonus donations for each card activation and annual renewal.

What’s great about co-branded cards is that you could potentially stack your donations by also contributing the cash back rewards you earn on your purchases in addition to the automatic donation. The downside is that few charities are large and/or popular enough to garner their own co-branded card, so your organization options are likely to be quite limited.

Give Back (& Get a Little, Too)

Each year, billions of dollars go to causes and charities near and dear to our hearts, helping fund research, save lives, and improve the well-being of people and animals alike. The work of many of these great organizations relies heavily (and, sometimes, exclusively) on public and private donations, from people like you and me, to keep the doors open and the good works flowing.

Credit card rewards can be a simple way to donate to a favorite cause — without breaking your budget. And not only can donating your credit card rewards be an easy way to help a good cause, but it can also be an effective way to keep a rarely used account open and active. This is because even a small cash back or points donation will typically count as “account activity,” resetting the clock on any potential point expirations due to inactivity.

One thing to keep in mind is that your rewards donation won’t have the same tax benefits as a cash donation. In the eyes of the tax collectors, credit card rewards are typically considered to be discounts, not income, so your donation won’t be tax-deductible.

Ashley Dull is the Finance Vertical Manager at Digital Brands, Inc., where she oversees content published on CardRates.com and BadCredit.org. Ashley works closely with experts and industry leaders in every sector of finance to develop authoritative guides, news, and advice articles with regards to audience interest.

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