Credit Cards: Keen To Go Green?
This Summer saw the launch of 'Breathe' the long-awaited 'green' credit card from Barclaycard. In a bid to ease customers environmental conscience Barclaycard has boosted its green credentials by offering cardholders a series of 'go green' initiatives and promises to donate 50% of net profits after tax to projects such as PURE, a UK charity that helps tackle climate change. It has pledged that in the 1st year donations will reach a minimum of £1m.
Barclaycard Breathe offers a greener way to manage your account online. Designed to increase convenience whilst reducing consumption, this new credit card will only issue online statements along with all marketing literature & advertising. Breathe credit card customers will receive regular online updates giving details of the recipient projects & amounts given.
The credit card itself is made out of PETG, a material more environmentally friendly than a traditional PVC card. When new cards are issued the old credit cards will go into a recycling scheme.
In addition Barclaycard's new card, which has a standard interest rate of 14.9% APR, offers a number of incentives to encourage greener spending. Breathe cardholders will benefit from a lower interest rate of 5.9% on most public transport & amazing discounts when they buy certain green energy saving products such as £25 off Ecotricity, up to £50 off British Gas home insulation & 10% off Halfords Cycles & accessories. There is a 0% interest on balance transfers for 6 months from the account opening.
However many of these initiatives have been welcomed with skepticism by critics who claim that financial institutions and banks are merely jumping on the climate change bandwagon in an aim to get more publicity. After the launch, earlier this year in London, of the "We're in this together" campaign, the eight big companies made up of Barclaycard, B&Q, British Gas, Marks & Spencer, Sky, Tesco, Royal Sun Alliance and O2 claimed their aim was to help every UK household to cut their carbon emission by 1 ton over the next 3 years.
Barclaycard's chief executive, Antony Jenkins has said: "Barclaycard Breathe makes it easy for the people to do their bit in the fight against climate change by offering incentives to make being green easier & supporting projects around the world that help reduce carbon emissions."
In contrast, an analyst at the financial website Moneyfacts.co.uk, Michelle Slade, has questioned the idea of linking donations with profits. It has been pointed out that those cardholders who pay their balance on time, incurring no late payment charges or interest, will in fact not be contributing to such carbon reduction projects.
"These customers will be loss makers for Barclaycard," she said, "especially when you consider the operational and administration costs of running a credit card. Therefore customers paying interest each month on their accounts would end up contributing more to green projects but "only at the cost of hurting their own pockets."
Barclaycard Breathe's green contribution therefore depends largely on its profit level. Cardholders who rack up their payable interest due to increased debt and/or the inability to make more than the minimum monthly repayment will in effect be generating higher profits.
Minimum monthly repayments may be low or 'affordable', for example a reduction from Barclaycard from 2.5% to 2.25% of the outstanding balance, but it is worth taking into account and remembering that these moves by credit card companies are not designed to help you pay off what you owe.
Would it not therefore be better to grab yourself the best deal, save money on interest and use this cost saving to donate to a charity of your own cause and choice?
Other green ethical credit cards include American Express Red, supported by pop star and activist Bono, which contributes to the Global Fund to help fight Aids in Africa. A range of credit cards from the Co-operative Bank also donate money to charities of the cardholder's choice i.e. Greenpeace and Oxfam.
HSBC has also launched a 'green' option on its current account which aims to see its customers opt out of receiving monthly statements, cheque books, letters or any other paper mail relating to their accounts.
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Published on September 28, 2007
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