Donation methods: credit vs cheque

How much you give and the effectiveness of the organisations that you give to together determine the impact of your donations. The seemingly trivial decision of whether to pay by cheque or credit card may affect both these factors, so it’s worth considering which payment method will help you do the most good.

Consider the fees that are charged on credit-card transactions. The largest of these is the interchange fee, which in the US is typically 1 to 3 percent. American interchange fees, however, are anomalously high: in the UK the average fee is just 0.79% (see the chart in this article for other countries’ rates). Depending on how much you give and where you live, you could end up paying hundreds of dollars to the bank that issued your credit card.

Several organisations, including the Schistosomaiasis Control Initiative and Vegan Outreach, have arrangements that allow them to avoid paying these fees. If the organisation that you’re donating to can avoid fees, the convenience of credit-card donations may make them the best choice. This is especially true if you receive incentives for credit-card purchases, such as cashback or airline miles.

Credit-card fees are relatively small, though, and they probably aren’t the most important determinant of how you should pay for your donations. Psychological effects are likely to have a larger impact on your giving.

One relevant psychological factor is the tendency to spend more money when paying for things by credit card than by cheque. This additional spending is part of the reason that most businesses don’t charge extra for credit-card purchases or offer rebates to customers who pay by cheque or in cash, even though businesses must pay fees on credit-card transactions. Experimental evidence provides additional support for this hypothesis. In one study (Prelec and Simester 2001), participants bid on sports tickets. Those who were told that they would have to pay with a credit card if they won the auction were willing to pay about twice as much as those who were told that their payment would have to be in cash.

In another study (Feinberg 1986), subjects were falsely told they were taking part in an experiment related to ‘impression formation’ and were seated alone at a table in a faculty member’s office. The researchers had placed credit-card insignias and replicas on the tables at which some of the participants sat. After a few minutes, a stranger knocked at the door and asked for a donation to the United Way. Subjects exposed to the credit-card materials were more likely to give, and they gave in larger amounts.

This finding is surprising given that other research has shown that priming people with the idea of money (eg, by seating them in front of a computer screen that showed notes floating in water) reduces their willingness to help others (Vohs, Mead, and Goode 2006).

A second psychological factor is specific to recurring credit-card donations, which have the advantage of making giving the default option. It takes extra effort not to give, so people who have set up recurring donations are likely to give more. On the other hand, the automatic nature of these donations might detract from the psychological satisfaction of giving.

Recurring donations have a second possible downside: the same inertia that encourages people to keep giving also encourages them to keep giving to the same organisation even if a better giving opportunity comes along.

After giving to UNICEF for a few years, I found out about GiveWell and its donation recommendations. But I waited almost a year before cancelling my UNICEF recurring donations. If I’d had to write a cheque or fill out an online form every month, I probably would have shifted my donations to a more effective organisation sooner. So if you haven’t done much research on which charities are most effective or if your feelings are in flux, it might be wise to stick to one-time donations.

Though recurring credit-card donations make giving easier, it might be better to pledge to give a certain percentage of your income. Then how much you give will be the result of conscious deliberation rather than the vagaries of individual psychology. Even if you make a giving pledge, though, it’s possible that you would give more if you were paying with a credit card than by cheque, and it’s important to take into account the fees deducted from credit-card donations.


Feinberg, Richard A. “Credit Cards as Spending Facilitating Stimuli: A Conditioning Interpretation.” Journal of Consumer Research 13, no. 3 (1986): 348–356. JSTOR Link.

Prelec, Drazen, and Duncan Simester. “Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay.” Marketing Letters 12, no. 1 (2001): 5–12. PDF.

Vohs, Kathleen D., Nicole L. Mead, and Miranda R. Goode. “The Psychological Consequences of Money.” Science 314, no. 5802 (2006): 1154–1156. PDF.