Wednesday, October 22, 2008

Credit Cards and Charitable Giving

In recent year's, the often maligned credit card has taken on yet another useful function, that of funding your favorite charities. While most people think about using a credit card for online shopping, buying groceries or filling up their cars with gasoline, the thought of giving with a credit card is somewhat new.

This topic came to the forefront in 2005 with the massive destruction of hurricane Katrina and the related outpouring of charitable giving major charities like the Red Cross and Salvation Army. In television, direct mail and online advertising, the word was quickly spread that not only could donors make a difference in relieving the suffering. And, with their donations to these national charities, donors could make this impact immediately by using a credit card.

Charitable giving with a credit card is not only limited to disaster situations, either. Large charities like the United Way have been able to dramatically expand their humanitarian reach by enabling supporters to make pledges through one-time or recurring monthly payments charged directly to a Visa, MasterCard, Discover or American Express credit card.

Other non-profit organizations, apart from true charities, can benefit from credit card payments. Beyond the basic immediate payment benefit are the positives of capturing donor information for future giving and tax deduction purposes. A good example is local public radio and television stations that offer supporters a way to break up larger annual gifts into manageable monthly increments using an automatically recurring credit card payment.

And, depending on the type of card used to make charitable donations, airline miles, cash back and other credit card-related rewards can potentially be earned on any amount pledged. This is because the charge made to the card is considered a standard merchant purchase transaction by the credit card issuer when calculating eligible purchases.

So, when the time comes to open up your heart and wallet for charitable giving, remember to consider making that gift with a credit card, especially if you have a credit card that offers some type of rewards. Who knows, maybe if you have been religiously using a rewards credit card throughout the year, the cash back earned could itself be enough for a generous donation to a deserving cause.

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