Should you use a credit card to make a political campaign contribution?

There may be transaction fees attached to your political donation, if you make that payment through credit card. (iStock)

Fundraising for federal political candidates have nearly passed the $3 billion mark through March for 2020 campaigns, according to OpenSecrets.org, and roughly half of that amount has come from individual donors.

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If you’re thinking about donating to your preferred candidate, paying by credit card is a convenient option. But depending on how you contribute, not all of your money will go toward helping your candidate win. And in some cases, you may have to pay a premium just for the convenience.

What are transaction fees for a campaign donation?

Every time you use your credit card, the card’s payment processor — companies like Visa, Mastercard, Discover and American Express — charges a merchant fee on the transaction. The fees are typically a small percentage of the transaction paid by the campaign, which is the merchant, and can vary for each processor.

However, with so many donors, those fees add up. According to a Newsy analysis of Federal Election Commission data, federal political campaigns have paid more than $220 million in credit card processing fees since the 2008 election cycle.

With some fundraising websites, it’s the donor that pays a fee to use their credit card. “Many charge a per-transaction fee as well as a percentage,” said Miranda Marquit, a credit card expert and candidate for the Idaho House of Representatives. “So if you make one big donation, the recipient might get charged 30 cents plus a percentage.”

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PayPal, for instance, charges 2.9 percent plus $0.30 for each credit card transaction. So if you make a $20 donation, the total charge on your credit card will be $20.88.

That doesn’t sound like a lot, but it’s money you wouldn’t have to spend if you were to pay with a debit card or an ACH transfer from your checking account instead.

Are transaction fees for donations tax-deductible?

Political contributions aren’t tax-deductible on a federal level, so any transaction fees you pay for using your credit card don’t qualify for a tax break either.

And while Arkansas and Oregon offer a tax credit for political contributions, neither state includes transaction fees in its definition of what constitutes a contribution—also, note that in Arkansas, the credits apply only to state-level donations.

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That said, it may still make financial sense to make one large contribution instead of recurring small-dollar donations, especially if there’s a per-transaction fee on top of a percentage.

“If you spread out your donations, either you or the campaign gets hit for that 30 cents each time, depending on who the website charges the transaction fee,” said Marquit. Again, that’s not a lot of money, but it can add up over time. And, fortunately, you can avoid all credit card-related fees if you opt for a different payment method.

Regardless of how you choose to pay, a more sizeable donation can make a bigger impact with bigger campaign-related expenses, especially if it’s a local or state campaign.

“As a candidate, I like one bigger donation if you can afford it because it lets me do things like pay a web developer or buy some yard signs,” said Marquit. “On the other hand, an ongoing donation can be nice as it can help cover recurring costs, like web hosting or office space.”

Do donations raise your credit score?

Using your credit card regularly, keeping your balance relatively low and paying your bill on time every month can help improve your credit score. However, using your credit card for political campaign donations isn’t weighted any different than any other transaction on your account.

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If you have a rewards card, you could earn points, miles or cash back on the transaction. But most of the best cash back credit cards max out at 2 percent cash back, which is lower than what PayPal and similar websites charge. So you’ll still be losing money on the transaction.

Another reason credit cards may be better is that they provide better fraud protection than debit cards. But in the case of providing your credit card information to a political campaign, the risk of fraud is extremely low.

As a result, if you’re thinking of donating to a political campaign, consider using your debit card or checking account instead. Not only are processing fees lower for the campaign, but you also won’t have to worry about paying transaction fees on your end.