America's 200 million credit cardholders are better at accruing rewards than spending them. Last year, we failed to redeem about $16 billion worth of loyalty points, one survey showed. Apparently, what motivates us to get cards in the first place isn't the extras on offer. It's the simple convenience of having plastic when we need it.
If you're someone who doesn't care much about rewards, you might consider Charity Charge. A new MasterCard issued by CommerceBank, it gives away your cash-back bonus to any nonprofit of your choice, including K-12 schools, colleges, and religious institutions. Also, it seems to offer more favorable terms than some other "affinity"-type charity cards out there.
Every purchase made with the Charity Charge card generates a 1% cash-back, and there are no processing fees when you send the money on (the charity gets the whole amount). Other bank-charity tie-ups offer 0.5% or less of the cash-back amount, or they involve high processing fees. For example, American Express charges 2.25% to process donations, reducing what recipients actually get.
CEO and founder Stephen Garten says affinity arrangements—like Bank of America's deal with the World Wildlife Fund—also reduce consumer choice. "People care about multiple causes, and what they care about changes over time," he says. "We've worked out a way to scale it, so it's one card that gives to them all."
"People care about multiple causes, and what they care about changes over time."
Charity Charge is a public benefit corporation, meaning it looks to serve social goals as well as financial ones. It makes money not by charging consumers or the nonprofits, but through fees paid by Commercebank and MasterCard based on the number of new customers it can bring in. You don't need to be a bank customer to get the card; just go to the Charity Charge site and start the application process. You set your charity choices ahead of time, and you can change them at any stage. There are no annual fees, and the extras—like added warranty on products you buy and an ID theft protection service—are included.
"I just want to make doing good part of the routine of everyday living," Garten says. "A lot of people are saying 'what's the point of points?' This is an easy way for them to do good in the world."