Forgotten loyalty accounts, unused sign-up bonuses, cobweb-covered miles. The ghosts of credit cards past might be a downer for you, but donating unused rewards to charity could help those in need — and might even keep the rest of your points and miles from expiring.
Donations of frequent-flier miles are a “critical, budget-relieving resource” for the Make-A-Wish Foundation, says Josh deBerge, the foundation’s director of public relations. The charity grants wishes for children with life-threatening medical conditions. “We grant 15,000 wishes each year with tens of thousands of wish participants, so airline travel is our largest expense as an organization.”
Donating rewards and perks that might otherwise go to waste is a painless way to help out organizations like Make-A-Wish. About one-third of earned loyalty rewards — worth $16 billion! — weren’t redeemed in 2011, according to the most recent data available from Colloquy, a loyalty marketing research firm.
How it works
These days, most airline, hotel and issuer loyalty programs let you donate miles, points and cash back to charity with just a few clicks. Programs that allow donations are listed in the next section. Here’s how you can contribute:
Loyalty programs usually count donations as “account activity.” That means that if your points or miles are due to expire because of inactivity, a small donation could restart the clock. If you’ve been sitting on a mother lode of miles because you’re waiting for a sweet flight deal, making a mileage donation could keep those miles active.
Where you can donate
To donate rewards, go to the website where you’d normally redeem them. If you have a co-branded airline card, for example, go to the airline’s website to donate, not the card issuer’s website. Here’s where you can give, based on the types of rewards you’ve earned.
Airline Miles
Hotel Points
Issuer Rewards
What does the charity get, exactly?
You might think that if you donate 5,000 points, the charity will get 5,000 points — right? Well, not necessarily. It depends on your loyalty program and the charity.
Charities usually receive rewards donations in one of two ways:
Most nonprofit websites clearly explain how they use point and mile donations. If you have any questions, you can always give them a call and get more information.
The fine print
Hypothetically, donating your rewards is simple: You find a good charity, unload your points, miles or cash back, and go about your business with a smile on your face. But there are a few other important things to know beforehand:
Donations aren’t tax-deductible. The IRS generally views credit card rewards as discounts, not income. So even if you earned thousands of dollars’ worth of credit card sign-up bonuses this year, Uncle Sam wouldn’t ask for a cut.
The downside: You typically can’t claim a deduction for donating those rewards. However, you could get a tax deduction if you redeemed your rewards for cash back and used that money to make a separate donation.
Contributions are irreversible. For the most part, points and miles donations are final. So before you fork over your entire rewards balance, make sure you’ve thought things through.
Rewards can have low redemption values. If your issuer converts your rewards to dollars for donations, your gift might become less valuable.
For example, Hilton HHonors points usually are worth about 0.5 cent each, according to NerdWallet valuations. But when you donate them, the charity gets only 0.25 cent per point, cutting their value in half.
A low redemption value doesn’t have to be a deal breaker. A small donation is better than no donation, right?
But if you want to make a bigger difference, consider making an additional cash donation or signing up to volunteer with the organization. The charity will appreciate the extra support.
This article originally published by NerdWallet.
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