Credit card companies are well-known for the rewards and benefits they provide. But what’s often ignored is the amount of environmental pollution they produce.
Credit card companies, just like all companies, emit greenhouse gases from their operations. Their reliance on plastic credit cards has further contributed to a plastic waste problem in our oceans and landfills, and their investments in oil and gas companies help to keep the fossil fuel industry alive.
If these environmental impacts make you feel uneasy, there are alternatives you can try. You could get yourself a carbon credit card to help reduce your carbon footprint, or an affinity credit card to support conservation projects around the world.
In this article, we take a look at how credit card companies pollute the environment, and what you can do as a consumer to opt out.
Why credit cards became mainstream
From just a million credit cards in circulation in 1970 to more than 365 million open credit card accounts today in America, the credit card has become one of the most popular payment methods of our times. With a credit card, you can borrow money quickly and make expensive purchases. More importantly, they help you build a good credit score.
The good bits about credit cards and their environmental impact
Just as credit cards were becoming popular in the 1970s, the environmental movement overtook public life. Activists highlighted the harmful impacts of pesticides in food production as well as the deforestation caused by high levels of paper consumption in the business sector. The banking industry, in particular, came under focus because of its heavy reliance on paper for checks, credit card statements, and office documents.
In response to these environmental concerns, the credit card industry adopted sustainable measures. They began moving most of their services online to lower their paper consumption, with significant reductions in their environmental impact.
Studies have found that credit card transactions using payment terminals consumed about 3.78 grams of CO2 per transaction – a lot less than the 4.60 grams of CO2 consumed by cash transactions. Cash has a higher carbon footprint due to the emissions associated with banknote production, ATM operations, and the transportation of cash.
According to researchers, with the expansion of renewable energies and energy-efficient technologies, credit card issuers could further reduce the carbon footprint of cashless transactions by up to 44%.
How did credit card companies change society?
The quick rise of credit card companies ushered in an era of increased spending.
Several businesses, especially those in the retail industry, experienced skyrocketing growth thanks to the popularity of credit cards among consumers. Customers could pay for expensive purchases without needing to pay with cash upfront. Checks were no longer needed and payments could be made in seconds both online and offline.
As credit cards became easier to apply for, the buying power of the American public increased with them. People could enjoy dinners at restaurants and purchase things regularly with credit instead of having to save up to buy later.
Is credit good for our future economy?
As long as consumers are able to repay their credit card balances, credit has big potential to keep economic activity strong for several more decades.
Credit enables consumers and businesses to purchase items they need. Businesses, especially new ones, may use credit to acquire tools, warehouses, and office supplies essential to their growth. Similarly, consumers might use credit cards to buy electronics, such as a personal laptop or a camera, to start a side hustle.
But it doesn’t stop there. Consistent and responsible use of credit can make consumers and businesses eligible for high-value loans. These loans enable wealth-building by giving borrowers the ability to buy property, invest in themselves and their organizations, and expand their operations, all of which are essential to the growth of the economy.
When consumers and businesses can borrow money quickly, economic activity flourishes.
Impact of the credit card industry on the environment
Overspending with credit cards does, of course, have some downsides.
Vigorous economic activity expands the growth of the manufacturing, transportation, and electricity sectors, which are our planet’s biggest contributors to greenhouse gas emissions. Also, many of the banks that issue credit cards invest heavily in fossil fuels.
If we are to use our credit cards responsibly, understanding their environmental impact is a crucial first step.
Credit card plastic and the environment
Recent research has found that our love of credit cards may be contributing to a major plastic pollution problem.
Most plastic credit cards are made of PVC (polyvinyl chloride), a sturdy plastic material that’s quite difficult to recycle. Because most recycling stations won’t accept plastic credit cards, several millions of them end up in our landfills and oceans each year. If we were to stack all of the credit cards in circulation right now on top of one another, they would create a mountain as high as 13 Mount Everests.
When plastic credit cards are left to accumulate in the environment, they break down into microplastics that harm human and animal health. Dyes and inks that wash off credit cards may also seep into groundwater reservoirs and pollute freshwater sources.
It’s difficult to rein in credit card use because it helps to encourage consumer spending, which in turn spurs economic growth. But at the same time, overspending on our credit cards can lead to a fast consumer culture, in which items are bought in an instant and quickly discarded when they are no longer considered useful – leading to the unnecessary depletion of our scarce natural resources.
Sustainability – why it matters and how to opt for it
Without any intervention, our credit card waste problem could soon spiral out of control.
Thankfully, quite a few sustainable solutions are available that can help us tackle this problem effectively. These solutions allow us to enjoy the benefits of credit cards while reducing their environmental impact at the same time.
Switching to a sustainable bank is one such solution. Sustainable banks actively look for ways to reduce their carbon footprints. They may cut down on their paper consumption by digitizing their products and services, or they may invest in switching their power supply to renewable energies.
Additionally, you could opt for a green credit card that helps you donate to environmental causes. These credit cards are designed to donate a percentage of each transaction to the environmental charity they’re affiliated with.
Environmental alternatives to credit cards
Mainstream credit cards aren’t the only way for you to build credit.
Carbon credit cards, affinity credit cards, and online payment accounts are alternatives that can help you spend money responsibly – while benefiting the planet.
Go carbon neutral with Aspiration
Aspiration is a B Corp certified socially responsible neobank that puts sustainability at the core of its business.
Since its foundation in 2013, they have not invested a single dollar in fossil fuels, firearms, or private prisons. Instead, they opt to create green financial products that help customers grow their wealth and reduce their carbon footprint.
The Aspiration Zero carbon credit card does exactly that. It’s a unique credit card that tracks the carbon emissions of purchases made on the card and plants a carbon offset tree each time the card is used. When customers plant 60 trees in a month, Aspiration rewards them with 1% cashback on all purchases for that month.
The waitlist for the Aspiration Zero is now open so you can sign up for early access to the card.
Affinity credit cards
An affinity credit card can be a great alternative to a traditional credit card.
These credit cards are linked to a partnering charity that receives about 0.08% of each transaction as a donation. The charity also receives about $3 when a customer opens a new card account or renews their current account.
Bank of America currently has the widest selection of affinity credit cards. Customers can choose to get a card affiliated with Defenders of Wildlife, National Wildlife Federation, The Nature Conservancy, or the World Wildlife Fund. Some cards support health-related causes such as the Susan G. Komen breast cancer research foundation.
Online payment platforms
Online payment platforms like PayPal, Payoneer, and Skrill can also help you use your money sustainably.
Being online-only, these payment platforms produce little to no plastic or paper waste. They may have a considerable carbon footprint due to the vast amounts of energy their data centers consume, but this is being gradually reduced as the centers are switched to 100% renewable energy over the next decade.
Some platforms, like PayPal, offer digital credit lines that can help you enjoy the benefits of credit without having to worry about plastic or paper waste.
Ready to take your sustainability to the next level?
Check out Aspiration to learn more about green financing or to preorder the Aspiration Zero and start working towards becoming carbon neutral!