The Environmental Impact of Your Credit Card (and How to Change It)

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Credit cards have undoubtedly made our lives more convenient – you can use them to make secure purchases, book flights and hotels, or donate generously to charities of your choice, all without the need to handle cash.

But this very convenience does come with a cost. Each purchase you make with your credit card increases your carbon footprint because all products and services generate greenhouse gas emissions when they’re produced. 

The good news though is that with the right credit card, you can keep your environmental impact to a minimum or even eliminate it in some cases. There are a handful of environmentally-friendly credit cards that help customers track the carbon footprint of their purchases, buy automatic carbon offsets, and make regular donations 

Carbon footprints and payments

Whenever we buy food, pay for petrol, and turn on the lights in our homes, we increase our carbon footprint by a small percentage. Almost everything we do produces greenhouse gas emissions which float up into the atmosphere and trap heat, contributing to global warming. 

How do our spending habits impact climate change? 

As individuals, making conscious decisions about the kinds of products and services we purchase can help reduce our carbon footprint

A 2015 study by leading climate scientists discovered that food items like meat and daily fossil fuel-dependent activities such as driving accounted for more than 60% of a household’s environmental impact. Other studies found that as people got wealthier, their energy consumption increased exponentially. 

The effects are most visible around holiday seasons when American consumers buy gifts and go on holidays. It’s estimated that each American wastes 100 pounds of food during the holidays, and over 2 billion Christmas cards are mailed every year – polluting landfills and rivers when they’re thrown away later.

Without a careful watch on our spending habits, we can become unwitting accomplices in environmental destruction.

Can you reduce your carbon footprint? 

Almost anyone can likely reduce their carbon footprint by making changes to their lifestyle. 

While a concerted global effort is required to tackle climate change, the individual choices you make in your day-to-day life can help lessen your personal impact on the planet.

Often the best areas to start looking into are your travel and shopping habits. You could walk, bike, or take the bus to work to reduce your fossil fuel consumption. Researchers estimate that you could save 2.6 tons of carbon dioxide by going carless for a year – the equivalent of a roundtrip transatlantic flight.

Incentives to reduce your carbon footprint with credit card rewards 

A credit card might not be the first thing to come to mind when you’re thinking of tools that could help you reduce your carbon footprint. But credit cards with environmentally-friendly rewards and incentives can help you shop more responsibly and ethically.

They may offer cashback rewards when you make purchases from socially responsible companies, or donate a percentage of each transaction to an environmental charity involved in ocean cleanup or sustainable agriculture.

There are even initiatives like the Plant Your Change program that allow you to automatically offset the carbon footprint of your purchases. By enrolling your credit card in this program, you can round up each purchase to the nearest dollar and use the spare change to plant a tree with the help of a reforestation partner

How the credit card revolutionized payment

Although the credit card has only been around since 1950, it has already changed the way we interact with money. 

Here’s a look at how the credit card revolutionized payment.

It encourages spending 

With credit limits that can stretch into the high $10,000s, credit card owners today have plenty of room for spending. Payments can be made easily with just a swipe or an online form and the purchase amount doesn’t need to be paid off right away. 

Credit cards encourage spending because you’re essentially given money you don’t have in the form of credit. When spending rewards and cashback offers are added to the mix, you have a recipe for continuous spending. Every purchase you make provides you with points and cash rewards that can be put towards free flights, hotel bookings, and discounts.

At the same time, credit cards help you track your spending with the help of credit card statements and 24/7 online banking websites and mobile applications. With credit cards, there’s no longer a need to keep a ledger to track your purchases.

It helps reduce waste

As credit cards and other forms of electronic payment become more widely accepted, the need for cash reduces. They’re valid for several years of use and can be recycled, whereas when cash comes to the end of its lifetime, it gets shredded and sent to a landfill.

The option to check credit card statements online instead of receiving paper bills can also help to reduce your paper consumption. You can also pay your bills, make purchases, and schedule transactions online without having to drive to the local bank branch or store. 

It has made payments more secure 

Access to  payments with greater security payments is another credit card bonus. Since they’re not linked to your bank account, credit cards can provide you with an extra layer of security when making purchases. The credit card issuer pays for the product or service first on your behalf, and only when you’ve paid off the balance is the bill settled.

In addition, credit cards can help to protect you from fraud. Consumer protection regulations, such as the zero liability policy adopted by most major credit card companies, do not hold cardholders responsible for unauthorized charges. Credit cards today also come with chip technology that encrypts your data so that thieves and counterfeiters cannot steal your card information easily during point-of-sale transactions.

Why the credit card as we know it has to go 

Despite their many advantages, growing public concern about the environment has recently put credit cards under fierce scrutiny. Many eco-conscious consumers are concerned that plastic credit cards, and the pro-spending culture they embody, may be harming the environment.

In response, several sustainable banks have begun issuing biodegradable credit cards that come with climate-fighting features.

Most modern credit cards are not sustainable

One of the main complaints that eco-conscious consumers have about modern credit cards is the plastic they’re made from. 

According to some estimates, the credit card industry produces 6 billion plastic credit cards per year that, once issued, are seldom collected from customers to be recycled. Most plastic cards are made of PVC plastic which is tough to recycle, causing them to often end up in landfills.

To solve this waste problem, some sustainable banks are issuing credit cards made using biodegradable plant fibers or recycled ocean plastics. Other banks are considering replacing the cards with mobile wallets or RFID (Radio Frequency Identification) chips that can be embedded in wearable devices such as bracelets. 

The aim is to reduce the astronomical amount of plastic that’s currently being used to manufacture plastic credit cards.

The most sustainable financial institutions today 

Sustainable financial institutions put environmental responsibility at the heart of their operations by investing in renewable energy technologies instead of fossil fuels and helping local communities to grow their wealth.

Three of the most sustainable financial institutions today are Aspiration, Amalgamated Bank, and Beneficial State Bank. 

  • Aspiration is a B-Corp certified neobank that does not invest a single dollar in oil and gas companies. They offer a portfolio of savings accounts, investment portfolios, and carbon credit cards that reward customers for supporting socially responsible companies.
  • Amalgamated Bank is the largest union-owned bank in America. Based out of New York City, Amalgamated helps individual and organizational customers advocate for LGBTQ+, immigrant, and workers’ rights in their communities.
  • Beneficial State Bank is a sustainable bank focused on helping marginalized and low-income communities build wealth. They invest heavily in a variety of social initiatives, from prison divestment to racial equality.

Credit cards making a change 

If you’re looking for a credit card to help you boost your green credentials, check out the cards below to help you align your day-to-day spending habits with your environmental values.

  • The Aspiration Zero is a carbon credit card that helps you track the carbon footprint of your purchases. Offered by the sustainable neobank, Aspiration, this credit card plants a carbon offset tree on your behalf each time you make a purchase.

When cardholders make 60 or more purchases with this card in a month, Aspiration considers them to have achieved their monthly goal of carbon zero, and will reward them with 1% cashback on all of their purchases for that month. Interested customers can join the waitlist today to apply for the Aspiration Zero.

  • The Charity Charge Mastercard is a unique credit card that gives you the opportunity to use your cashback rewards as donations to up to three charities, schools, and/or religious organizations. You can choose to support organisations working with environmental, health, education, or poverty reduction issues.
  • The World Wildlife Fund credit card from Bank of America is one of the few credit cards that help you donate automatically and consistently to an environmental nonprofit. The WWF receives 0.08% of all net retail purchases made on the card, which is about eight cents per $100 spent. 

Ready to make a positive change?

For more information on green financial activity, or to apply for the Aspiration Zero, check out Aspiration today. 

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