Charity credit cards: generate 33 x as much for charity anyway!

Lloyds TSB is withdrawing its charity credit cards. Actually this doesn’t matter because you can actually generate MORE money for charities through your credit card. Here’s how:

1. Get a credit card which gives you cash-back on your purchases. The cash that these cards give you is often more than they’d given the charity anyway. Some charity cards give only 25p per £100 spent whereas cash-back card may be £5. So that’s 20x increase just to start.

2. Donate the money once a year to your chosen charity. You can reclaim Gift Aid (iff you’re a UK tax-payer). That’s a second way which increase the money that the charity gets – increasing it by 25% if you pay basic rate tax and 66% if you pay higher rate tax. So if you get the 66% increase on a cash-back card, you’re now generating 33x times as much money for charity.

3. The charity may incur lower transaction fees this way, because it may have been getting the money in several small dollops. (Transaction fees are usually paid per transaction, i.e., one big payment incurs a twelfth of the cost which twelve small dollops generate.)

Voila. Sadly, the ‘nudge’ is against you, i.e., you have to get your act together to make the donation, rather than it being done automatically for you. But since you might generate more than 33x as much money, you can nudge yourself!

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