Nearly half of Gen Z and millennials are planning to donate to a political campaign in 2020, and it's likely that many will use the convenience of their credit cards to do so.
But while credit cards are an easy way to make a payment, donors should consider that when you charge your donation to a credit card, a small piece of it is used to pay card processing fees, which means not all of your money is going toward your favorite candidate.
According to a Newsy analysis of Federal Election Commission data, national political campaigns have shelled out more than $220 million to credit card-processing companies, like American Express and PayPal, since the start of the 2008 election cycle.
Below, CNBC Select explores how to use your credit card to make a political donation.
What are the fees charged when using your credit card to donate to a political candidate?
Campaigns, like all other businesses that take credit cards, have assessed transaction fees that decrease the amount of the actual contribution, Melanie Sloan, former executive director of watchdog group Citizens for Responsibility and Ethics in Washington, tells CNBC Select.
Just as grocery stores and retailers have to pay a fee to accept credit cards, so do political candidates. When you give money to a political campaign or candidate using your credit card, a processing fee is taken as a percentage of that donation. There is usually a per-transaction fee charged as well.
For example, PayPal, one of the most popular electronic payment platforms, charges a processing fee of 2.9%, plus $0.30 per transaction. Raise The Money, another fundraising platform for candidates, has a processing fee of 4.9%, plus $0.25 per contribution. If you were to use the latter to make a donation, a $50 contribution would really end up being $47.30 in the campaign's pockets.
This means that although websites say that they accept donations as small as $1, be mindful that these small-dollar contributions actually end up being eaten up by fees. In fact, the smaller the donation, the larger the percentage of it will go toward the fixed processing and per-transaction fees, rather than the candidate or campaign. So while every dollar may count, that doesn't necessarily mean it goes toward your intended purpose.
Before you decide to set up recurring donations (and read the fine print first), consider consolidating them into one larger donation to reduce the amount of fees and increase how much money is going to campaigns or candidates.
The good news is that if you use a flat-rate cash-back card, like the Citi Double Cash® Card that earns you up to 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24 (see rates and fees). The Capital One Venture Rewards Credit Card also earns 2X miles per dollar on all spending, you can reap rewards by donating. (See rates and fees). That might inspire you to donate a little more.
Who pays for these credit card fees?
Many credit card processors charge these fees to the candidate's campaign, but that's not always the case. Sometimes, it's you paying for them.
Crowdfunding site Crowdpac, which candidates use to fundraise grassroots donations, has donors themselves pay the credit card fees, which are 2.9%, plus $.30 per transaction.
While specific vendors and platforms offer different fees on transactions, there is a standard amount to expect when it comes to political donations.
"A pretty safe range for most political contribution processing, depending on various factors, would be 3-6%, plus $0.20-$0.30," Jonathan Zucker, a campaign finance attorney and former CEO of ActBlue, a popular electronic payment platform, tells CNBC Select. "Fees below this are all but impossible to find; fees above this range are not extremely uncommon, but usually accompany services (such as web hosting or other software offerings) that are paid for with processing fees on transactions rather than in some other way."
Should you use credit, debit or a check to make a political donation?
Security should be a big factor when you're trying to decide what payment method you should use to make a donation. Credit cards are better than using debit cards because they offer more protections against things like identity theft and fraud. Most important is that you can regularly review your credit card statements, and you can refute charges within your grace period to avoid having to pay for fraudulent expenses.
E-checks (also referred to as ACH or EFT) are another popular payment option that can be an alternative to paying credit card processing fees. But e-checks require your routing number and account number, which could leave you more exposed.
"I would recommend against using e-checks except when using a donation platform with which you are very familiar," Zucker says.
And then there's the old-school option of mailing a check, which isn't as convenient as just typing in your credit card information online, but it eases any tension that your credit information could be hacked. And when it comes to processing fees, Zucker says that checks are still costly in a way, considering human staff time, but donors themselves won't have to cover the cost.
When it comes to your personal information, know that the Federal Election Commission (FEC) makes public any donors who give more than $200 during the election cycle.
What are some tips to be safe when donating using your credit card?
Just like anything else money-related, there are some tips to follow to be secure when making campaign donations with a credit card.
In general, it's best not to donate when in a rush. You'll want to first find out who gets access to your personal information from the donation portal and make sure to review the website's privacy policy. "If there isn't one, that's probably a red flag," Julia Jacobson, a Boston-based data-security lawyer, tells CNBC Select.
It's always best to triple check who is receiving the donation on behalf of the candidate. "Do some poking around. For example, call the telephone number if one is provided," Jacobson says. "Look up the credit card processor. Use a trusted service like PayPal whenever you can."
To be confident a site is safe, use a secure connection ("https" should be in the browser) and visit the official website for the campaign or candidate you're donating to. "Fraudsters are quite clever in making things that look legit but are not," Jacobson says.
And at the end of the day, keeping track of your spending will help you quickly identify any problems.
"The most important safeguard is checking your card statement each month and contacting anyone who posted a charge you do not recognize," Zucker says.
What happens to your credit card information when the campaign ends?
No matter how secure the website is that you used to donate to a political campaign, when that campaign ends and the site shuts down, there's no telling exactly where all that credit card data goes.
Thankfully, campaigns almost never store card information themselves. Zucker notes that if they do store it with a vendor, it is generally not going to go beyond that vendor and will then be purged according to that vendor's policies.
"Card information is rarely transferred; in the rare cases that it is, it can only be passed between appropriately certified systems using heavily encrypted secure methods of transfer," Zucker says.
