Buy Now, Pay Later

© Elizabeth Prager

The credit counseling company BCS Alliance argues that the credit card industry is "the most profitable one in the U.S., with annual earnings in the $30 billion range. Many people might be surprised to learn that a single credit card issuer—MBNA—earned 1.5 times more profit than McDonalds in 2004." These days the average American household carries a credit card balance of $7,500 to $8,000, and debt continues to climb among young people and teenagers.

What’s Your Affinity?

One way credit card companies are working to attract customers is to offer affinity programs, in which cards are branded with the logo or name of an organization. The organization gains name recognition and donations while the credit card company or bank gains customers and member lists. "The program has no cons for us; we get a lump sum of a half a percentage point of all purchases made with the card," explains Fred Brandon of The Wilderness Society about his group’s affinity card program. "The amount we receive depends on who uses the card and how much they spend," he adds.

The Sierra Club, The Nature Conservancy, National Wildlife Federation, the National Audubon Society and the World Wildlife Fund are just a few environmental organizations that have signed affinity deals with such providers as MBNA America and First USA. The credit card companies typically donate a half a percentage point from every purchase, balance transfer or cash advance and/or a small donation to the group for each new cardholder or renewal. Says Sarah Comis of the Humane Society of the U.S. (HSUS), "The program is a nice way for our members to show others what they care about. We started the program 10 years ago and now have 37,000 accounts donating money to our general fund."

If you charge $100 a month for a year, and a half a percentage point is donated, you’d amass $6 a year for the group with the pretty picture on your card. Even at this low rate, 55,000 of the Sierra Club’s 500,000 members have donated more than $1 million since 1986. Members may also receive rewards, discounts and membership to the affinity organization while they hold the card. A possible downside of these cards is that they may have higher interest rates and many have annual fees.

Steve Putnam, vice president of business development and corporate relations at HSUS, told CardRatings.com that his group’s program through MBNA has "consistently contributed well into the six figures each year." The donations are used to protect wildlife habitats, run humane education programs, spay and neuter dogs and cats and provide disaster relief for animals.

Some organizations also offer affinity checks and debit cards. But be aware that not all credit cards or checks with scenic pictures on them will guarantee a donation. Some feature forests and endangered animals only as part of their selection of picture options, so make sure to read the fine print.

Stop Charging Destruction

Ironically, the same corporations that are helping the environment through affinity programs can also endanger the environment by financing projects that promote global warming, leaky oil pipelines and rainforest destruction. In recent years, the Rainforest Action Network (RAN) has led the fight against corporations like Citibank, Bank of America and JPMorgan Chase to force them to implement new environmentally friendly practices.

In 2000 and 2001, RAN coordinated "Days of Action" that resulted in more than 80 demonstrations, rallies, marches, television commercials and credit card cut ups on five continents at college campuses and in front of corporate headquarters. After years of pressure, in January 2004 Citibank agreed not to lend to companies known to violate logging laws. The company also pledged to report greenhouse gas emissions from all power-sector projects it finances and to increase its investment in projects that use clean, renewable energy sources.

Citigroup will soon make available an energy-efficient Fannie Mae mortgage program to promote greener home design. In a move that may sound the death knell for the term "using plastic," Citibank has also agreed to consider making non-plastic credit cards.

In April, a group of students protested in front of JPMorgan Chase’s New York City headquarters, claiming that the company lacks documentation on its carbon emissions and has financed gold mines in Peru that polluted local waters with heavy metals. The students also cited bankrolling of disruptive oil drilling on ancestral Native American lands and illegal logging in Indonesia. Since then, the financial giant has agreed to revise its policies.

RAN is now building on these successes to negotiate with the next 10 largest banks in the U.S.

STEPHANIE WHITE is an E intern who tries to use credit wisely.