Credit Cards For Good And Evil!

A new credit card offers tax-efficient charitable donations; MINT launches its Gift Card; and RBS/NatWest ditches those nasty card cheques.

I have three stories relating to credit cards for you today, which handily fall into these categories: the good, the bad and the ugly!

THE GOOD: the first charity credit card to add Gift Aid to donations

For several years, I've been waiting for a good cause to launch a charity credit card which automatically adds Gift Aid to the donations generated by spending on it. Happily, a Gift Aided charity credit card has now arrived from Hope for Children (registered charity no. 1041258), in the form of its "Donate As You Spend" MasterCard.

Hope for Children ("HOPE") is a low cost charity working in the UK and developing countries in support of disabled and disadvantaged children. When you first use its new MasterCard, the card issuer (Sygma Bank UK) donates £10 to HOPE, which automatically reclaims Gift Aid of £2.80 from the taxman. Also, for every £100 of purchases made (but not balance transfers or cash withdrawals), a further 25p (plus 7p of Gift Aid) goes to HOPE. You can apply for this credit card on 0870 751 9861.

This card also has an introductory offer of 0% on balance transfers for six months, charges 16.9% typical APR on purchases, and has a standard interest-free period of fifty days. Overall, it's better than most charity credit cards, although you can be even more caring and generous by using a cashback credit card, as I revealed here. I look forward to more Gift Aided charity cards arriving soon!

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THE BAD: the MINT Gift Card

The idea of the MINT Gift Card is simple: rather than spending hours shopping around for presents, you simply hand over a plastic card which is pre-loaded with electronic cash and let the recipients buy gifts that they actually want.

The MINT Gift Card is accepted at all outlets which accept VISA Electron cards, and can be pre-loaded with anything from £10 to £250. Although there are no fees or charges for using one in the UK, each card costs £3 to purchase, plus overseas purchases attract a 2.75% currency transaction fee. Replacement cards also cost £3 -- and note that any money spent without the cardholder's permission, before MINT has been notified of the loss or theft, will not be refunded.

Sure, this card is more versatile than gift vouchers which are valid at a single outlet or chain, but it's less useful than cash or cheques, so why waste £3 on one? To me, MINT's new Gift Card is a solution to a problem that doesn't really exist, and is best avoided!

THE UGLY: RBS/NatWest withdraws credit-card cheques

As I have explained before, credit-card cheques are nothing short of pure evil. The vast majority (98%) are sent unsolicited to cardholders; they charge sky-high rates of interest (typically, 20%+ a year) and handling fees of 2%+ per cheque; plus they offer no interest-free period nor the legal protection that using a credit card provides. In short, they are toxic time-bombs waiting to blow up, and card issuers make around £443 million a year from them!

Although the Department of Trade and Industry is expected to announce the results of its inquiry into credit-card cheques within weeks, there's no chance that the DTI will ban these dreadful cheques. Instead, it's likely to order issuers to adhere to a new code of practice covering the distribution and use of credit-card cheques. Indeed, banking payments association APACS is launching a new Summary Box for credit-card cheques, which will improve the information provided to cardholders who are tempted by these horrors.

Now for some good news: earlier this year, Royal Bank of Scotland/NatWest temporarily suspended the issue of credit-card cheques, a move which it decided to make permanent last Friday. Note that any card cheques used after the end of this month will no longer be accepted by the group. This move reduces the number of players in this foul market from eleven to ten.

Still, I can't think of one good reason to use a credit-card cheque in preference to other cheaper forms of borrowing, so my advice is to give them the 'bargepole treatment' every time!

Bargains for borrowers:compare credit cards, personal loans and bank accounts!