Eco-friendly credit cards might do good, but they can be complicated.
A few years ago, big banks rolled out freshly minted eco-cards at a fast clip. Bank of America introduced its Brighter Planet Visa, and Wells Fargo trotted out its green awards program for rewards members.
Then the din slowed.
Some eco-cards even died. For example, the GE Money Earth Rewards credit card, in which cardholders could donate 1% of their purchases to buy carbon offsets, is no more.
"A lot of companies jumped on the bandwagon in 2008," says Kelly Hlavinka, managing partner at Colloquy, a loyalty marketing firm. "Then things slowed down."
The sticking point was that some eco-cards had watered down rewards programs compared to their other brethren.
Lately, that's changing though, as new cards give consumers more choices.
Witness the Zync card, offered by American Express. It offers a free Eco Pack add-on with three benefits: access to Greenopia merchant rankings; double membership rewards for shopping at more than 4,000 green merchants; and an eco-concierge, if you need to find, say, a green building firm.
American Express also buys $1 worth of carbon offsets for every cardholder who selects the Eco Pack. Cardholders can donate their earned points at American Express' Members Give donation zone, where more than a million charities are listed. And Eco Pack members get a 25% discount on the points needed to redeem eco-friendly merchandise and carbon offsets at the membership awards hub.
"I like the Zync card," says Hlavinka. "There's no longer a totally separate card." She also likes Capital One Card Lab Connect, where organizations can create their own custom credit cards.
"Both cards are innovative and indicative of where banks are going," she says.
Capital One also offers a No Hassle Giving Site, where 1.2 million charities are listed, including eco-friendly ones. Reward points are donated in just one click.
Each time someone uses an eco-card, small percentages are paid back to the organization. For example, the Capital One Card Lab Connect donates 2% of a supporter's gas purchase back to a cause.
Not everyone likes the cards, though. "I don't see the ROI (return on investment) from these donations," says John Ulzheimer, president of consumer education at Credit.com. "Technically, it's not your money. I'd imagine the bank gets the write-off." He recommends making contributions to eco-friendly charities on your own.
Other older eco-credit cards differ greatly. For example, Bank of America's Brighter Planet is essentially an affinity card. Cardholders earn one EarthSmart point for every $1 spent in net retail purchases. Points help finance the building of wind turbines, solar energy and other carbon offsets.
Citi's ThankYou rewards program takes another twist. It lets consumers redeem their points for a range of environmentally responsible products, such as earth-friendly cleaners. Cardholders can also donate points to any charity. Wells Fargo offers a similar rewards program with eco-incentives.
"The rewards aren't fabulous," says Ulzheimer. "And they're a little complicated to understand, so consumers shy away from it. People would rather have cash back and travel points."
And credit cards, no matter how good, are still credit cards, he says. So Ulzheimer counsels consumers to check out an eco-card's interest rate, annual fee and terms before signing up. For example, the Brighter Planet card has no fee, but does charge a 13% to 21% interest rate after seven months. "Ignore the veneer and choose a card for its terms," says Ulzheimer.
On the plus side, some credit cards are going gung-ho green. The Discover More card is made of biodegradable plastic, which breaks down within landfills.
Don't let green blind you though. Rewards cards are designed for people who like to spend. "You need to do the math," says Hlavinka.
Ultimately, even warm-and-fuzzy feelings about your cool eco-card can't make up for high costs.