Smart Giving: Charity Donations on Your Credit Card
Do you have a credit card? Many college students habitually use credit cards to pay for their expenses. But, trickier question: do you pay for it yourself? Most friends I know who do use credit cards use a card paid for by their parents, never learning how to pay a bill, write a check, or learn how to build credit for when they are financially independent adults. While the appeal of low initial payments and retail benefits can convince some students to register for a credit card of their own, swipegood.com is trying a new method –– appealing to your instinct to give to the less fortunate.
Swipegood takes all of your credit and debit accounts and rounds up the cent amount from each purchase to the nearest dollar. This money that is “rounded up” to complete the nearest dollar is donated to a charity of your choice. Don’t know how to contribute to charity as a financially strapped college student, or a person under a time crunch with no time to volunteer? Smartgood is a great option to give back everyday. There are 386 charities to choose from that benefit education, health, and environmental initiatives, among others.
However, Swipegood is a for-profit business, taking 5% of each monthly donation for operating costs and 2.5% to cover the price of third-party fees. The organization makes it simple for students (or any credit card holders) to sponsor charitable organizations, yet it is still a business aiming to benefit from your desire to donate.
So is it worth it? You can surely find other, more direct, ways to donate. Perhaps a sponsored run or a regular volunteering spot would be more suitable to your interests. Or maybe an alternative spring break trip in which you perform community service over spring vacation with a group of your classmates is more your style.There are many opportunities advertised on campus (check out the umbrella community service group at your school) that allow students give back even if you don't have a credit or debit card to your name!
Farnoosh Torabi, personal finance expert for credit.com and Author of "Psych Yourself Rich," is hesitant about students taking on the responsibility of a credit card in college. She comments on the new law in place, the CARD act, that in fact states if you are under the age of 21 and have no job you cannot qualify for a credit card. Unless you have proof of income or a cosigner on the account, banks are not permitted to issue a credit card to a student under age 21.
Torabi continues: "That said, if you have a credit card and wish to donate to charity using a program like SmartGiving, this is only a good idea if you can afford to pay off your credit card balance in full each month. Otherwise you will pay interest on your monthly balance and that $15 you give to charity each month using your credit card could end up costing you much much more."
Torabi reminds readers that out of pocket giving, or more direct volunteer work in the community, may just be the way to go.She adds "My advice: donate to charity using cash from your bank account or your wallet. Or if you don't have money (because, after all, you're a student!) donate your time and assistance to your favorite causes and local charities."
-- By Kylie Thompson, Harvard University
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