FEATURE ARTICLE — APRIL/MAY 2013

Responsible Credit Cards

Since Green America launched our Break Up With Your Mega-Bank campaign in 2008, weve heard from thousands of Green Americans who have broken up with their mega-banks, switching their bank accounts to community development banks or credit unions. And its no wonder why for decades, mega-banks like Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, and others have been engaging in predatory lending, investing in fossil fuels, and deceiving consumers with hidden charges and feesand they were a central cause of the Great Recession.

But even if youve switched your bank account to a local credit union, you may still be linked to mega banks through credit cards. When you open a credit card account, your feesannual fees, balance transfer fees, and any late fees, as well as the fees that the merchants pay and any interest you pay on your card balancego to the issuing bank. The bank, in turn, makes loans to individuals and businesses.

When you use a mega-banks card, youre bolstering all the things the banks loans support, from clearcutting forests to new coal-fired power plants to predatory loans, says Fran Teplitz, Green Americas director of social investing programs. Community development banks and credit unions provide the best opportunity for cardholders to avoid supporting bad practices and to positively impact communities.

The good news is that you can find a credit card issued by a community development bank or credit union, which will in turn use your fees to support operations you can feel good about. Using a responsible credit card, when combined with smart practices like minimizing debt and paying off your card on time, may change your relationship with that little piece of plastic in your wallet. If you use credit cards, you can put your money to work for change every time you make a charge.

Mega-Bank Madness

You know those credit card offers that sometimes flood your mail or inbox? Odds are they are from a mega-bank, and odds are even better that the mega-bank has a history of engaging in unethical business practices and funding problematic projects.

Foreclosure scandals: The economy continues to suffer from the downturn initiated by the wave of dishonest mortgages issued by mega-banks, and homeowners are still struggling through the foreclosure crisis. Early this year, 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 in 2009 and 2010.

Contributing to climate change: Banks and the companies they fund continue to engage in mountaintop-removal coal mining and to build carbonspewing coal-fired power plants, despite the threat of climate change. Dirty Money, a 2012 report released by the Rainforest Action Network (RAN), BankTrack, and the Sierra Club, grades US Banks based on their connections to mountaintop-removal mining and coal-fired power plants. Bank of America, JP Morgan Chase, Citi, Morgan Stanley, and Wells Fargo were found to be the five worst banks when it comes to coal fi nancing, with Bank of America leading the pack.

Harming the Earth: Many megabanks are also underwriting projects in the tar sands of Canada; a practice that is destroying Canadas Boreal Forest, which provides critical habitat for several species and is one of the largest intact forests remaining on Earth. According to 2010 research by RAN, Canadian and American banks continue to provide financing and underwriting to companies involved in tar sands extraction, including Canadian bank RBC, JP Morgan Chase, Citi, and Bank of America.

And, says RAN, Morgan Stanley, Citigroup, and Merrill Lynch provided loan capital for Chinas notorious Three Gorges Dam, an electrification project completed in 2012 that displaced over 1.4 million people, submerged toxic facilities, and destroyed critical wetlands.

Playing politics: Many mega-banks make large political donations to parties and causes that may or may not mesh with your values. JP Morgan Chase, Citi-Group, Bank of America, Wells Fargo, and US Bancorp all gave primarily to Republican candidates in 2011-2012, with some money also going to Democrats.

Banks and other organizations that make political contributions generally [do so hoping] they have earned the right to be heard, says Viveca Novak at the Center for Responsive Politics (CFRP). Any industry with as many issues before Congress as banks have will do whatever it can to make its arguments to the right people.

For detailed information on campaign donations from these institutions, visit CFRPs opensecrets.org.

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 once common in the credit card industry. The CARD Act protects consumers from retroactive interest rate increases, while giving them greater notice of changes in terms, more time to pay monthly bills, and more. However, mega-banks continue to work around these laws, enacting predatory policies like Wells Fargos policy to charge $15/month on checking accounts holding less than $7,500.

Some mega-banks have started offering new loan products with names like Checking Account Advance or Direct Deposit Advance. These products offer a customer an advance on the next direct deposit into their checking account, which is then deducted automatically by the bankat a hugely infl ated interest rateupon their customers direct deposit.

Some of these loans have interests rates of 365 percent, says Teplitz. These are nothing more than predatory payday lending schemes by other names.

Cards from Better Banks

You can direct your credit card fees and interest away from the mega-banks by using a credit card issued by a community development bank or credit union. Community development institutions use your fees to help small businesses thrive, provide loans to inventive entrepreneurs, and help homeowners manage their existing loans or purchase

houses that fit in their budgets.

Visit BreakUpWithYourMegaBank.org or download our free Guide to Community Investing to find a local community development bank or credit union near you that issues a card.

Below are some of the best options. Each institution issues its own card, unless otherwise noted.

Hope Federal Credit Union Mastercard (7-18% APR, no annual fee). Hope has worked for decades to improve lives in the Mid-South. You must be a member of HOPE to apply for the Mastercard, but membership is open to all.

Permaculture Credit Unions (PCU) Visa card (12.99-21.99% APR, no annual fee): Based in New Mexico, PCU is committed to Earth-friendly and socially responsible loans and investments. PCUs card is issued by the Illinois Credit Union League. Its available to anyone, even if youre not a PCU account holder, though applicants should mention theyre affiliated with PCU. (Editor’s update: As of May 6, 2013, we understand that cardholders are required to be members of the credit union.)

Beneficial State Bank (formerly One PacificCoast Bank, FSB ) has partnered with TCM Bank, N.A. to issue a Visa, as well as affinity cards (see next section) that support different missions. TCM Bank is owned by ICBA Bancard, a subsidiary of the Independent Community Bankers of America. You do not need a Beneficial State Bank account to apply for these cards:

Beneficial State Bank Visa Platinum (9.99-17.99% APR, no annual fee) supports this banks mission to lift up communities and preserve the environment in the Pacific Northwest.

Green America Visa (9.99-17.99% APR, no annual fee) supports Green Americas programs.

Redirect Visa (9.99-17.99% APR, no annual fee). For each purchase made with the card, a percentage of the interchange income is split between Beneficial State Bank and Sustainable Travel International. In addition to a conventional rewards program, the card also earns cardholders discounts at participating green businesses in the three regions with Redirect green business guides: Denver/Boulder/Ft.Collins, Portland/Vancouver, and Salt Lake City. Many of the businesses in the Redirect guide offer web and phone sales to other areas.

Salmon Nation Visa (9.99-17.99% APR, no annual fee) directs a percentage of its income to growing environmental stewardship of Salmon Nation, a bio-region from Alaska to Oregon.

The Loop Card (11.99% APR, no annual fee): A Visa issued by Albina Community Bank in Oregon. The card supports Albinas mission to lift up Portland. An additional one percent of every purchase helps fund projects in education, social services, environment, the arts, or economic development. You dont need an Albina account to apply.

Self-Help Credit Union Classic and Platinum Visa cards (9.9512.95% APR, no annual fee): Self-Help, headquartered in North Carolina, works in communities traditionally underserved by conventional financial institutions. It offers its credit cards to members; through online banking, anyone nationwide can become an account holder and apply.

What about Affinity Cards?

Affinity cards promise the ability to support select nonprofits through your credit card purchases. Each time you use an affinity card, the issuing bank donates a set amount to a partner nonprofitaveraging half a penny for every dollar you charge or transfer, according to Bankrate.com. Such cards are often connected with a mega-bank; therefore, most of the fees associated with the card support that bank and any of its problematic practices. Also, APR fees tend to be higher for affinity credit cards.

One that donates to causes you may care about is the Working Assets Visa (10.99 -19.99% APR, no annual fee), which donates ten cents from every purchase to a portfolio of 50 progressive nonprofit organizations. It also plants a tree and donates ten cents to renewable energy organizations for every tank of gas purchased with its card. And it serves as a progressive political force, giving its customers the opportunity to speak out on critical issues through its CredoAction.com site. One caveat: Bank of America issues the card.

Break Up Today!

Cutting up that mega-bank credit card is another step to breaking up with your mega bank and starting a healthier relationship with a local community development bank or credit union. Visit Green Americas BreakUpWithYourMegaBank.org to find a directory of community development institutions and for more tips and resources.

Sarah Tarver-Wahlquist

Green America Visa Card

Beneficial State Bank has partnered with Green America to offer a VISA credit card that turns your everyday purchases into social and environmental change. Your purchases on the card support Green Americas programs and Beneficial State Bank, an FDIC-insured bank committed to sustainable community development. For more information call 888/326-2265 or visit Beneficial State Bank.