Why you shouldn't support banks helping charities

Charity financial products are usually no good and not worth going for. With one notable exception...

Banks, lenders and insurers sometimes offer products that promise to make contributions to charity dependent on your spend or savings.

However, supporting banks' charity financial products isn't normally a good way to donate to charity.

Financial companies offer poor charity products

Charity financial products tend to be even less generous than reward or loyalty schemes, which is pretty damning criticism.

Banks and other financial services providers will sell credit cards and other products with the idea that you join up to help them support good causes.

There is little call for charity financial products from consumers, and those who take them tend not to consider the alternatives. If they did, they'd realise they could help charities much more at the same or lower cost by choosing other products.

If a lender promises to pay 0.25% of whatever you spend on a credit card to a charity – which is pretty typical of charity credit cards – it's invariably better to get a superior deal with a non charity-linked cashback card and then donate the difference to charity.

Other financial products are almost always the same. £35 donated to charity for car insurance, £1 for travel insurance, £40 to charity for home insurance: all are offers I have seen which sound nice, but when you consider the massive difference in price between those products and the cheapest similar ones you'll see that you could donate even more by going for something else.

Some products come pretty close

Over the years I've looked into credit cards, mortgages, insurance and other banking products that have promised to help charities. Occasionally a charity product comes pretty close to the top. The Co-op has previously offered a Unison current account paying £100 cashback to members, with another £50 going to a debt charity, for example.

Another is the Leeds Building Society savings account, which currently pays 3% fixed for a year with no withdrawals allowed during the period, plus 0.1% going to Marie Curie Cancer Care. However, you could donate even more to charity by getting one-year fixed deals paying upwards of 3.5%, or by getting a fixed-rate cash ISA, which is a savings account that saves even more thanks to being tax free.

Check out The one-year savings bond that offers a 5% return! and the UK’s best Cash ISAs for more.

Here's a good charity product!

In the past five or six years, I think I have found just a single charity financial product that I think is seriously worthwhile. The product is still around today: it's the Virgin Money Charity Credit Card, which pays 0.8% of all credit card purchases, with no cap, to the charity of your choice, plus gift aid on top. Alternatively, you can take the 0.8% in cashback for yourself, although you don't get the aid, no matter how desperate your finances are!

This is pretty competitive with the credit card's main cashback card competitors. Check out Earn top cashback on your spending for more on the best cashback deals in the market.

Don't forget to donate

There is one good thing about charity financial products: you don't have to remember to donate. You can't get distracted by the latest stylish headphones or a new dress in a high street window and blow your charity budget in a fit of conspicuous consumption.

So, if you decide to shop around for the cheapest financial products and then donate for yourself, remember to actually do so!

More: The one-year savings bond that offers a 5% return! | The UK's best Stocks and Shares ISAs