Charities to get their due credit

Alliance & Leicester is looking to give money-back card-holders a charity option

Britain's only credit card to give cash rebates, rather than points or other rewards, is looking at offering card-holders the option of having those rebates paid automatically to nominated charities.

The proposal, by Alliance & Leicester's Money Back credit card, could increase competition among charity-linked credit cards, with other card companies coming under pressure to increase the donations they give on card-holders' spending.

The spending rebates of up to 2 per cent offered by the A&L card are noticeably more generous than those on most charity cards. Many holders of the A&L Money Back credit card can expect to earn rebates of pounds 50 or more this year. The same spending on a charity-linked credit card might trigger donations of just pounds 20.

A&L is assessing demand for the service following a suggestion in last week's edition of the Independent on Sunday. Assuming reasonable demand, the former building society plans to put an option in card literature for rebates to be paid direct to one of a limited choice of charities, which could include any permanent charitable foundation set up as a memorial to Diana, Princess of Wales. A&L said it favoured "humanitarian" charities although it would be guided by cardholders and the likelihood is it would offer a choice between a range of charities including third-world aid and conservation charities.

Existing holders of the A&L Money Back card are invited to call 0645 250 250 and to indicate whether they would be interested in the service and which charities they might want to support; people applying for the card on 0500 83 83 83 can also express an interest and name their favoured charities.

A&L's Money Back credit card has proved one of the most popular credit card launches of recent years. Since the spring it has attracted more than 160,000 people and the former society expects to pay at least pounds 5m in rebates in the card's first year.

The card has been particularly attractive to people who pay off their bills in full each month for the same reason that many of the people who sign up for charity-linked cards are full-payers: both offer "something for nothing", either for the individual or for a worthy cause.

The A&L card has no annual fee and the cash rebates of up to 2 per cent of spending can, in effect, be seen as a discount on purchases. The rebates are due to be paid out to cardholders in January in cheque form. As things stand, if cardholders want to pass the money on to a charity they will have to send off their own cheques to the charity; assuming A&L's move goes ahead this would be done automatically on their behalf. The idea is simply to make it easy for cardholders to be charitable: at present A&L expects most customers to pocket their rebates.

One executive in the charity-linked credit card market said of the effect of such a move: "Charities might well be coming back to us asking for a higher donation level." Charity credit cards are a small but growing section of the overall credit card market. While there are more than 1 million affinity cards in circulation that trigger donations to a chosen cause, only a proportion of these are for charities rather than, say, for clubs or universities. The typical deal is that when you sign up for a card, there is a one-off donation of pounds 5 to pounds 10. On top of this, every time you spend the card issuer makes a further donation equivalent to between 0.2 and 0.5 per cent of the value of your purchase, with most around 0.25 per cent.

The Co-operative Bank's Royal Society for Protection of Birds card has proved one of the most popular cards to date. The donation levels on this card are pounds 5 initially and 0.25 per cent thereafter, or 25p for every pounds 100 spent. On a spend of, say, pounds 2,500 a year, someone using this card would earn the RSPB pounds 6.25 a year on top of the initial pounds 5.

By comparison, the A&L Money Back card offers no initial benefit; rebates are directly linked to spending. For the rest of this year spending up to pounds 3,000 earns 1 per cent, and any spending over pounds 3,000 earns 2 per cent. From next year the rebates fall to 0.5 per cent and 1 per cent respectively. This year the same pounds 2,500 spent on the A&L card would earn a rebate of pounds 25, and pounds 12.50 in subsequent years. As things stand, the more someone spends the greater the difference between the A&L rebate and most charity- linked cards.

Assuming there is sufficient interest among card-holders, A&L hopes to be able to offer the charity option from early next year.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search

Money Insider: How to make credit cards pay

Andrew Hagger reveals how to get the most from your plastic

Questions of Cash: My 'perfect travel companion' from the Post Office was a waste of money

One reader purchased the Post Office Travel Money Plus Card for a motoring holiday but discovered it can't be used at self-service petrol stations or autoroute toll booths

Continuing low interest rates are encouraging more people to switch to interest-only mortgages

Interest-only mortgages return to give more flexibility to borrowers

The credit crunch put a temporary end to these once-popular mortgages. But lenders are waking up to rising demand and relaxing their rules

EU to scrap roaming charges in 2017: European Commission under fire for taking so long to act

UK consumer groups complained that British holidaymakers face another two years of mobile phone misery before the law comes into effect

On the money: Yorkshire building society has demonstrated that it is taking the P2P industry seriously

Is peer-to-peer lending a risk worth taking?

The P2P industry must do more to shake off an unjustified image of being too complex and risky for the everyday saver, says Andrew Hagger

Generating grievances: Scottish Power's Longannet station in Fife

Questions of Cash: Scottish Power says it's sorry - again and again

Six of the energy company's customer have cause to blow a fuse this week

Will Patisserie Valerie be the portfolio's sweet spot?

Derek Pain: 'Patience is a virtue but maybe I should cut and run'

Derek's portfolio is currently suffering because of his failure to be more ruthless

There are now more than three million people in “severe problem debt”

Debt managers are misleading vulnerable people, warns watchdog

One debtor was given a repayment plan that would have taken 125 years to repay

Challengers are smashing the traditional high street banks when it comes to offering decent savings rates

Ignore the new breed of savings institutions and you'll lose interest

NatWest has ripped up its pledge to never be the last bank in town

NatWest pledged five years ago it wouldn't close the last bank in town. Now villagers have been told the branch shuts in September

When the last bank closes, local shops quickly go out of business

Under new state pension rules we will all be much worse off

Why did no one notice? The Government hides behind complexity, says Neasa MacErlean

Bogus Islington landlord scams public for £20,000 in fake deposits

It’s not just Islington... Simon Read warns renters and landlords about a nationwide fraud operation

Questions of Cash: The paperwork wasn't right so I was left high and dry with a broken washing machine

A reader encountered a problem with a Currys washer/dryer care plan

Borrowers should steer clear of established providers to get the best rates

Interest rates have never been cheaper if you want a five-figure personal loan but for lower-value loans it's a very different picture

Personal banking: Banking chiefs at NatWest and RBS insist that they are over the worst of the technical issues but customers are still complaining of payment issues. NatWest has waived overdraft fees and told customers they can withdraw £100 more than their limit over the next few days

People’s bank in crisis again: What should you do about the NatWest/RBS meltdown?

Thousands still waiting for payments to go through

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'