The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
- The Tuesday following Thanksgiving is called Giving Tuesday, and it's a good time to use your credit card to give to your favorite causes.
- You may be eligible for a tax deduction on your giving to a qualified entity if you itemize your deductions.
- You could even donate your credit card rewards or give with an affinity card or by shopping at your favorite nonprofit.
After the consumer madness of Black Friday subsides and following the click-for-all shopping experience of Cyber Monday, the world takes a moment to consider giving.
What is Giving Tuesday?
Giving Tuesday is a worldwide day of donating, celebrated the Tuesday after Thanksgiving and the massive consumer spending days of Black Friday, Small Business Saturday and Cyber Monday.
Launched more than a decade ago, in 2012, Giving Tuesday is the official kickoff to the season of giving and a day to do good and focus on holiday and end-of-year donations to your favorite causes. That way, you can personally contribute to making the world a better place.
Americans donated over $3.1 billion to charities on Giving Tuesday 2022, according to the Giving Tuesday Data Collective. And while that number is impressive, there remains no shortage of need.
Tax deduction on charitable donations
Giving Tuesday is a great opportunity to give for a variety of reasons. Besides the overall fantastic feeling that comes with giving to a good cause, the donations are also tax deductible when given to a 501(c)3 tax exempt organization, which will give back to you during tax season. Donations to other nonprofits that are not set up in this way will not be eligible for a tax deduction.
Taxpayers can get a tax deduction on contributions of up to 60 percent of their adjusted gross income for any year. You can even carry forward any deductions you can’t take in a given year to reduce your tax liability for up to five years. One point to note is that you can make use of this tax deduction as long as you itemize your taxes. In case you prefer to take the standard deduction, you cannot get a separate tax deduction on your charitable contributions. Also, you should have a record through your bank account of the payment made or a statement from the charity acknowledging your donation to take advantage of a tax deduction on your giving.
Why use a credit card to donate on Giving Tuesday?
Donating on Giving Tuesday is easy with the arrival of the holiday gift-giving season, especially when you are already using credit cards for everyday purchases.
One point to note is that when you use a credit card, your cause will not get the full amount of your payment because of the credit card processing fees, or swipe fees, that will take a cut out of your donation. To offset this fee, which on average is about 2 to 3.5 percent of your card purchase amount, you could add on the processing fee to your donation. That way, your beneficiary will get the full benefit of your donation.
While the card processing fee is a disadvantage, using a credit card means you will have records for your tax filing. Additionally, in case your beneficiary is an overseas organization, try to use a card that doesn’t charge foreign transaction fees to make your donation.
Using a credit card to send a charitable donation often involves little more than visiting the official website of your favorite cause. Most major charities allow supporters to gift monetary donations through one-time payments or recurring payments charged directly to a credit card each month.
Many charities set up donations via text message. Apps such as the Mastercard Donate App could also help you make donations. Besides cards issued by Mastercard itself, you can also make donations through this app using cards issued by Visa and American Express. Other apps such as GiveSmart and Snowball could also help you enable your donations.
Here are just a few more options for using credit cards to help your favorite worthy cause.
Donate the rewards you’re not using
Note that if you donate credit card rewards to your favorite charity, you will likely not be eligible to take advantage of a tax deduction on your giving. That’s because the IRS considers rewards such as cash back, points and miles to be discounts that the card gives you on purchases, rather than income.
Many credit cards allow you to directly donate your rewards to charities such as UNICEF, the Red Cross and St. Jude Children’s Research Hospital. Consult the rewards section for your specific credit card for more information on participating charities. American Express, Citi and Discover all have direct donation options in their rewards redemption portals.
Even frequent flyer miles are welcomed, especially by charities like the Make-A-Wish foundation. The foundation’s director of public relations says that airline travel is the non-profit’s most significant expense and donated miles are a “critical and budget-relieving resource.”
If your current credit card earns cash back but does not allow you to donate it to charity directly, you can still redeem those accumulated dollars and cents to put toward your charitable donation.
Buy from companies that support Giving Tuesday
This extensive list of companies that donate to charity includes hotel chains, airlines, restaurants and retailers.
Do your homework and support organizations that support causes you believe in. By supporting those businesses, you’re indirectly helping the charities that benefit from their corporate donations.
Apply for credit cards that automatically give back
Instead of writing a check to your favorite charity, you could also find credit cards that support a cause with every transaction and maximize your gift. For example, the Aspiration Zero credit card commits to planting a tree every time a cardholder makes a purchase.
Applying for credit cards co-branded by specific charitable organizations or explicitly created for charitable donations — often called affinity credit cards — is another way to support your favored cause.
While you will be giving by using these cards, you will typically not be eligible for a tax deduction since the card issuer is the one that’s actually making the financial commitment to give, and it’s not coming out of your pocket.
More quick ways to give on Giving Tuesday
- Explore employer match programs: There’s a chance your employer matches donations to charitable organizations. This list of 51 major employers that match donations to nonprofits includes GE, American Express, Coca-Cola and Pfizer.
- Round up if you can: A few quick donation options include saying “yes” to the cashier when they ask if you’d like to donate $1 to a specific charity. If you gave on your last visit to the store, why not do it again?
- Donate food: While grocery shopping, pick up a few extra cans of vegetables, soup, broths or other shelf-stable items and drop those cans off at a local food bank on the way home.
- Shop at nonprofit retailers: Use your card at local Salvation Army or Goodwill Stores for those smaller gifts for office Christmas parties or tokens of appreciation for the mail carrier.
- Think globally, act locally: Don’t forget to support local charities! The Giving Tuesday website makes finding charities in your area simple. Users can search by city, state, organization type or even organization name.
It’s important to remember that charitable giving isn’t just something to do only around the holidays or for tax purposes.
Whether it’s a donation of time, money or the power of your voice in your local community, find a way to give back on Nov. 28, and give yourself the gift of giving.
The bottom line
Giving Tuesday, which falls on the Tuesday following Thanksgiving, is a good time to make use of your credit card to give to your favorite charities. There are a variety of ways to donate. You could use your credit card rewards, an affinity credit card that is allied with a particular cause or shop at your favorite nonprofit. Find out if your employer will match your giving to make a bigger impact. If you take itemized deductions on your tax return, you may be eligible to get a tax deduction on your giving. So you might even benefit from doing good.