Find the best credit card offers online.Charity donations going to victims of the Haiti earthquake given to relief organizations through credit card transactions are not going to be arriving to their destinations a hundred percent complete. Banks and credit card companies skim off a percentage off these donations as part of their so called “transaction costs.”
Whenever a donation is made through a credit card, only 97% of that donation actually gets to the relief organization. About 3% of the amount is skimmed off by banks and credit card companies. Known as transaction costs, credit card companies and banks in America make huge profits out of charitable donations that people make every year. According to an analysis made by the Huffington Post, that profit is estimated at around $250 million every year. In years where there have been major disasters, these profits rise sharply. Major humanitarian relief organizations such as Operation USA and Oxfam get more than 85% of their donations from credit card transactions and credit card providers have generally refused to waive transaction fees.
According to CEO of Operation USA, Richard Walden, only once has a credit card company agreed to waive transaction fees for the sake of charity. This was for the 2004 tsunami disaster. Walden says,”After the tsunami, we had thousands of donations, and American Express and I think one other company temporarily waived their fees. So if this thing ramps up, we’ll try to get in touch with these banks and see if they’ll waive the fee again for us.”
There is only one bank in America that offers a better solution for charities and those who want to donate through their credit cards: Capital One. The bank waives transaction costs for those with MasterCard or Visa credit cards through their “No Hassle Giving Site.” Through their site, donations go through their transactions 100% unskimmed. In contrast, banks in the United Kingdom bowed to public pressure after the 2004 tsunami and “waived interchange fees for all cross-charity and disaster or emergency appeals” according to the website of the UK Card Association.
The transaction fees that credit card companies and banks tack on donations are also far more than what is needed to cover cost of the transactions. Thus, companies such as American Express, Visa and MasterCard can generate considerably profits from each donation transaction.
Non-profit organizations have been reserved in their criticisms of credit card companies because they provide a very important service for them. They also have no other lower-cost options available and the four major credit card companies in the country actually maintain a small monopoly on the industry.
