Interest Rates on Charity Cards

If you are concerned that the charity might lose out by changing cards, you may wish to work out how much you would save by switching to a lower interest rate card and donating a portion of this to charity.

Let us consider the example of John Smith, who uses a Co-operative bank credit card that donates 25p to Greenpeace for every £100 he spends. He regularly carries forward a balance of £1,000 each month, on which he pays 17.9% interest.

John is searching the internet for financial services and finds an offer for a Capital One Platinum card, which gives him a balance transfer rate of just 3.9% for life.

Initially, he is reluctant to transfer the balance because he believes it will adversely affect the amount of money he is able to donate to Greenpeace. However, he gets out his calculator, and works out that the £1,000 balance will only cost £39 in interest with Capital One, compared to £179 in interest with the Co-op Bank.

This represents a saving of £140 per year. He decides to keep £100, and donates the £40 remainder to Greenpeace.