Plastic stretches to ethical spending

IF YOU want to give a warm glow to your Christmas spending this year, put it on a charity credit card, writes Harvey Jones. These cards make a small contribution to your favourite cause every time you flourish your plastic. The contribution may seem paltry - 25p for every pounds 100 spent is typical - but when thousands of other people are doing the same, the sums raised run into millions.

The Halifax Visa charity card has raised around pounds 10m for the British Heart Foundation, Imperial Cancer Research Fund and Mencap since its launch in 1988.

The contribution is paid by the bank rather than coming from your pocket. This sounds suspiciously charitable, but it is driven by commercial thinking as charity cards bring new customers for a minimal advertising spend.

Research suggests that owners of charity cards spend up to 40 per cent more on their cards than other card holders, says Jonathan Moakes, associate director of Affinity Solutions, a marketing consultancy.

He says there are two types of affinity cards benefiting people other than the holder - "cause-related affinity cards which give to charities such as the RSPCA, and relational affinity cards giving to bodies such as football clubs, which are not strictly charities but where you have a sense of belonging".

Bank of Scotland issues around 600,000 cards, which have raised more than pounds 13m since 1990 for around 500 groups, including charities such as Actionaid and Royal British Legion, as well as university alumni, sporting clubs, professional bodies and trade unions. It even issues a Star Trek affinity card.

All of the bank's cards pay 25p for every pounds 100 spent, plus a pounds 2.50 donation when a card is taken out. The cards pay a further pounds 2.50 after eight months and again after 20 months. The bank estimates that its cards should earn pounds 2.5m for their various causes this year.

To celebrate its 10th anniversary, the Halifax Visa card has just doubled its donation to 50p for every pounds 100 until an extra pounds 1m is raised.

Charity cards boast that everybody benefits, which is all very wholesome but no bar to checking the rates to see whether you are receiving a good deal. This is not as stingy as it sounds; if you are getting stung on interest rates, you might be better taking your card out elsewhere and finding a more cost-efficient way of giving to charity.

An alternative to an affinity card is a money-back card such as that offered by Alliance & Leicester, where customers receive 0.5 per cent back on annual expenditure up to pounds 3,000, rising to 1 per cent thereafter. There is no limit to the amount of money back you can earn.

In January, the bank says, it will send customers cheques worth pounds 10m back to cover expenditure during 1998, with an average payout of pounds 50. The Money-Back credit card charges 18.4 per cent APR, has no annual fee and will accept transferred balances at 9.9 per cent until they are cleared.

You could take out a money-back card and donate the savings to your favourite cause, and next year Alliance & Leicester plans to introduce a charity option to allow you to contribute directly. If you spend pounds 1,000 on this card you will get pounds 5 back, whereas a Bank of Scotland affinity card will contribute pounds 2.50, though in the first year this will rise to pounds 7.50 with the opening payments.