Why Switch to a Responsible Credit Card
When you open a credit card, your fees go to the issuing bank. This includes: fees merchants pay for each purchase, interest on your balance, annual fees, balance transfer fees, and late fees. The bank then makes loans to individuals and businesses.
The big global banks (Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, and others) have engaged in predatory lending, investing in fossil fuel companies and projects, and deceiving consumers with opening an unrequested account, hidden charges, and fees.
You can find credit cards issued by a community development bank or credit union, which will, in turn, use your fees to support sustainable loans and support their communities.
Be aware that some credit cards issued by local credit unions are provided through global banks.
The following are some examples of the practices of mega-banks.
- Climate change: The companies that banks fund continue to engage in building coal power plants. A report by the Rainforest Action Network (RAN) and the Sierra Club found that the worst five banks for financing coal are Bank of America, JP Morgan Chase, Citi, Morgan Stanley, and Wells Fargo.
- Foreclosure scandals: Global banks had a large role in the great recession of 2007-2009 partly because of the large number of dishonest mortgages. Bank of America, Citi, JP Morgan Chase, and Wells Fargo all agreed to pay billions of dollars to the US government to settle accusations that they improperly reviewed foreclosures and mishandled loan modifications.
- Three Gorges Dam – Citigroup, and Merrill Lynch provided loan capital for China’s Three Gorges Dam which displaced over a million people, submerged toxic facilities, and destroyed wetlands.
- Politics – Like many companies, mega-banks make large political donations. JP Morgan Chase, Citi-Group, Bank of America, Wells Fargo, and US Bancorp have mostly supported Republican candidates.
- Predatory lending: In 2009, the Credit Card Accountability Responsibility and Disclosure (CARD) Act was put into place to protect consumers from some of the worst predatory lending practices. These practices were common and global-banks continue to work around them. They use any number of fees on accounts.
Responsible Credit Card Options
Community Development Financial Institution (CDFI) certification is a designation given by the CDFI Fund to specialized organizations that provide financial services in low-income communities and to people who lack access to financing. CDFI’s finance community businesses, including small businesses, microenterprises, nonprofit organizations, commercial real estate, and affordable housing. There is a CDFI locator here: https://ofn.org/cdfi-locator.
Below are some responsible credit card options. Each institution issues its own responsible credit card.
Please review the fees and interest charged to make sure the card you choose is appropriate for you. We recommend using a credit card with no annual fee and paying it off each month to avoid interest and fees.
- Aspiration – Spend daily with Zero to neutralize your footprint and earn up to 1% cash back. Use your rewards to plant more trees or receive a statement credit.
- Green America – Green America’s Visa supports Green America’s programs. Their mission is to harness economic power to create a socially just and environmentally sustainable society.
- Hope Federal Credit Union – Hope CU has worked for decades to provide loans to underserved people in the southeast US.
- Self-Help Credit Union – Self-Help CU, based in North Carolina, works in traditionally underserved communities.
- Permaculture Credit Union’s (PCU) – PCU, based in New Mexico, is committed to sustainable responsible loans and investments. PCU’s card is issued by the Illinois Credit Union League.
- Beneficial State Bank – Beneficial State Bank, with TCM Bank, offers credit cards that support different missions to lift up communities and preserve the environment in the Pacific Northwest. TCM Bank is owned by ICBA Bancard, a subsidiary of the Independent Community Bankers of America.
- Redirect Visa – For each purchase made with the card, a percentage of the interchange income is split between Beneficial State Bank and Sustainable Travel International. They also provide discounts at participating green businesses in the Denver, Portland, and Salt Lake City areas.
- Salmon Nation Visa – Salmon Nation directs a percentage of its income to improve the environment from Alaska to Oregon.
- The Loop Card – The Loop Card is a Visa issued by Albina Community Bank in Oregon. It supports the mission to lift up Portland to fund projects in education, social services, the environment, the arts, or economic development.
In addition to credit cards, we recommend banking with CDFIs or local credit unions to get money out of the mega-banks.
We have a new index investing course