Can you donate your credit card rewards? We'll cut to the chase: Yes, you can. Sure, a lot of people love cash-back rewards as a tool for saving money and getting perks you wouldn't otherwise get, but some people like to use their savings as a way to give a gift to a charity; it's actually more common than you might think. So common, in fact, that many issuers already have simply processes in place to get your donated credit card rewards to the charity of your choosing.
A number of reward credit cards, including those issued by American Express, Citibank, Chase, Capital One and Discover, make it easy for you to donate your reward points.
So if you're thinking of donating your credit card rewards to a good cause helps kids, animals or some other worthwhile cause, here's what you'll want to know.
How to donate credit card rewards
If you have a credit card that has rewards points, and you want to give them to charity or perhaps a couple of charities, odds are, your credit card's webpage has a tab that you can click on, where it'll explain how to donate credit card rewards. It generally doesn't take too much time to set up, and often, you can set it up so that multiple charities receive your points or miles.
"Ok, but then what?" you ask.
How the charity receives rewards donations
It can vary. Sometimes, a charity will use the actual miles. For instance, if a charity often transports children with life-threatening medical conditions to a hospital, that charity will probably just take the miles. That said, with some nonprofits the rewards points are converted into cash before being sent to the charity, and sometimes the cash is worth less than, say, the miles. If it matters to you, check out the nonprofit's website or the credit card's donation webpage.
Is my credit card reward donation tax-deductible?
There will be the occasional exception, but usually, you won't be able to deduct those points on your taxes - unless you get cash back and then donate that actual cash to a charity. Remember that, in general, the government views credit card rewards as a discount rather than income. That's a good thing in that it means you generally won't be taxed on the rewards you earn; it also means, however, that it isn't considered you donating income when you give those rewards to a charity.
>LEARN MORE: Are your credit card rewards tax deductible?
A few more things to know about credit card reward donations to charity
No interchange fees, usually. As you probably know, if you're a merchant you pay a small percentage of your sale to the credit card issuer when a consumer pays with a credit card. Many credit cards, however, have worked out arrangements with credit card companies to process donations with no interchange fees. But in case it matters to you, Discover and American Express work with JustGive.org to process donations, and JustGive deducts a 2.25 percent transaction fee from your rewards.
Some credit card companies require you have a minimum number of points/rewards to donate. For example, American Express requires at least 1,000 points. For every 1,000 points, $10 will be donated to your charity of choice. There is no limit to the number of reward points you can redeem as donations, provided you have the available point balance in your rewards account.
Some credit card issuers require a minimum of 2,500 rewards points or $25 donations.
Not every charity accepts credit card rewards. Your charity of choice may not be on the list that does accept rewards; however, it shouldn't be hard to find one that does. For instance, American Express gives cardholders the flexibility to donate their rewards to more than 1 million U.S.-based charities.
Charities appreciate donations. For instance, Make-A-Wish Foundation of America accepts credit card reward miles from several airlines that it has relationships with: Delta (1,000 mile minimum), United (500-mile minimum), American Airlines (1,000-mile minimum), Southwest (2,000-mile minimum) and JetBlue (500-mile minimum). The charity says it needs 2.8 billion miles a year to take care of every travel-related wish it receives, so it can certainly put to use any miles someone wants to donate.
You probably should stay away from nonprofit affinity cards. It's painful to say that given that some wonderful, respected charities have their own credit cards. Charitable affinity credit cards were kind of a big thing for awhile, where you'd see a co-branded credit card in which you'd have a bank and big charity team up, and the charity would get a portion of every dollar you spent on the credit card. And what's not to love about that? But the problem is that the amount the nonprofits receive is often minuscule, generally around .08 percent of every dollar. So if you spend $1,000 on one of these credit cards, your favorite charity only receives $.80. You may feel that the $.80 going to the charity is better than nothing, of course, but if you really want to make a difference, you're probably better off going with a favorite credit card that is really generous with the rewards points and then donating those rewards or cash back directly to the charity. It's an extra step for you, but potentially more beneficial for your charity.
Final notes on donating those credit card rewards
As noted, you can donate rewards points from almost any credit card, but some cards make it easier than others - or have some interesting quirk that's worth pointing out. If there are some credit card issuers you especially like, such as Discover for instance, you'll be happy to learn that Discover credit card members can donate through its Discover Giving program. Card members can set up one-time or recurring donations of their rewards points.
And Citibank has a program in which, once you have 2,500 points on one of your Citi credit cards, you can donate them to American Red Cross Disaster Relief or the American Red Cross International Services or Smile Train, an organization that provides corrective surgery for children with cleft lips and palates.
Actually, aside from actually donating rewards points to charity, you'll probably feel a bit better about the world overall as you start researching your options for how to donate credit card rewards. The world has some rough customers and often offers some depressing headlines in the news, and but when you start looking at all of the ways you could help vulnerable people or animals, simply by donating your points and miles or cash back, and start thinking about what effort and energy it took to start these worthy causes in the first place, you might be reminded that there's still far more good in this world than bad.