A number of rewards card issuers are now offering cardholders a unique opportunity to make a donation to charity every time they make a purchase with the card. Cardholders are now able to apply online credit card rewards to a charity of their choice. The APRs for this style of card are not low and one has to wonder whether the issuing company is actually donating anything or rather passing the cost of the donation directly to cardholders through higher interest rates.
If you are of a mind to help others less fortunate than yourself, then you should definitely consider a card with which you will be able to apply online credit card rewards to the charity you choose. With this type of card, you will be able to make a donation to a charity without actually giving from your pocket. It may not feel like you are offering much but it all adds up. Charities will always be glad of air miles, gas rewards and any other help offered to them.
When you apply for one of these cards, you have to choose the option to ‘apply online credit card rewards’ when you go to the web page where you may surrender your reward points online. As far as I can see, the only downside for those who want to be involved in this scheme is that donations raise tax implications and you won’t get credit for it. Generally, you can use donations to charity to lower your amount of taxable income through tax deductions, but you are not able to when you donate your card rewards to charities.
The only way around the tax implications would be, as an alternative to choosing to apply online credit card rewards to charities, you claim the rewards for yourself, then donate a cash payment to your favorite charity instead. Depending how important the tax break is, you may be in a stronger position using the rewards yourself and then donating directly to the charity instead. This is the only way you are likely to see any tax benefits.
Remember, you will not want to be charged any extra interest charges just so you have the opportunity to apply online credit card rewards to your favourite charity. The card issuer is certainly not going to give your interest payments to a charitable organization, so donating your money in that way would be just like throwing your money in the garbage.
As long as you are in a position to pay off the full balance on your card account every month before the date you need to pay, then you can apply online credit card rewards to the charity of your choice without it making a difference to your pocket.