With credit cards, itâ€™s possible to support positive change with every charge.
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Millennials care about giving, with 84 percent of millennial employees having made a charitable donation in 2014, according to research by the Millennial Impact Project.
For those looking for a year-round approach to giving, credit can play a meaningful role. Here’s how millennials – or anyone else – can use credit cards to make a positive difference in the world.
1. Choose a socially conscious credit card.
It’s great to donate your own money, but charity credit cards let you support a cause each time you pull out a credit card. They give a percentage of everything you charge to a charitable cause, or let you donate rewards to a charity of your choice.
“The most responsible credit cards come from banks and credit unions that are committed to investing in their communities and provide responsible lending to support local communities, a clean environment, local and green businesses, and fair housing loans,” says Larsen. For example, the Sierra Club Affinity Card is a Visa card offered by Beneficial State Bank in Oakland, California. A percentage of every purchase goes to protecting wildlife and the environment.
To find out whether a credit card issuer supports issues you feel strongly about, talk to the bank about its lending practices, Larsen suggests, asking such questions as, \u2018Who is the bank lending money to?’ and \u2018How do these loans support a thriving community?’”
2. Incorporate giving into spending habits.
Donating money is easier when it can be done automatically. One way to do that is through technology, says Leena Patidar, an entrepreneur who developed an app that lets you donate extra change from your credit card charges to charities of your choice. As you spend money, the Coin Up app rounds up every transaction and sets the extra money aside to be donated to charity. “You can put donating on autopilot,” Patidar says.
Some card providers let you designate that your credit card rewards go to charities. Discover, for example, lets cardholders assign their rewards to any of nine charities, including the American Cancer Society, the ASPCA and the American Red Cross. Discover then contributes an additional $25,000 each year to the organization that receives the most donations from its cardholders. You can also donate travel rewards to organizations that depend on transportation, such as the American Red Cross and the Make a Wish Foundation.
The most responsible credit cards come from banks and credit unions that are committed to investing in their communities and provide responsible lending to support local communities, a clean environment, local and green businesses, and fair housing loans.
|\u2014 Todd Larsen|
3. Manage credit to facilitate a career of service.
Volunteer organizations can provide a meaningful experience for those who want to serve others. One of the most popular, the Peace Corps, has attracted more than 220,000 American volunteers since it was established in 1961. However, being deeply in debt could hurt your chances of being accepted. The Peace Corps. requires a 27-month commitment, and service cannot interfere with any court-mandated obligations, including required debt payments. For that reason, the Peace Corps advises applicants to pay off outstanding debts that can’t be paid or postponed during their service.
Your credit habits can also impact your future job propositions. A 2016 study by Cone Communications found that 75 percent of millennials would take a pay cut to work for a socially responsible company. However, if you’re mired in debt, you might have to stay in a higher-paying job you hate in order to meet your financial obligations.
4. Capitalize on credit to start a socially conscious business.
Millennials across the world are starting twice as many businesses as previous generations, according to the 2016 BNP Paribas Global Entrepreneur Report. Many want those businesses to bring good to the world. Yet some may have trouble getting a business loan, as nearly 43 percent of millennials have subprime credit scores, according to TransUnion.
“The reality is good credit allows you to take advantage of opportunities that can help you grow your business,” says Amanda Abella, a millennial and author of “The Make Money Your Honey Workbook.”A high credit score will increase your chances of being approved for a small business loan or qualifying for a small business credit card with favorable terms.
By using credit cards strategically, Abella has been able to pay for business expenses and earn rewards in the process. Without credit cards, she says her business might not have survived. “Back when my revenue wasn’t as stable and I was still dealing with late payments from clients, credit cards kept my business running smoothly until I got paid.”
In a world of competing financial interests, credit and charity can seem to be on opposite ends of the spectrum. But by focusing on both one can build a life dedicated to promoting positive change.
See related:6 ways to do more good on Giving Tuesday, Startups, apps, issuers simplify charitable giving, Charitable donation by credit card gives quick tax deduction, Every points counts with charity card donations