Credit cards used to come in standard, gold and platinum. Now there's green, too.
Following other businesses that are going green, the credit card industry is tapping this market. GE, Bank of America, Wells Fargo and Brighter Planet all have new environmentally friendly credit cards on the market or in the works. If you want to save the whales, offset CO2 emissions or contribute to another "green" cause, it is now as simple as swipe and sign.
How green cards work
Environmentally friendly credit cards are affinity cards issued by a credit card company. The card issuer donates a portion of your purchases (typically 1 percent through a rewards program) to a green cause. Sometimes the consumer gets to choose the specific cause, but most often the funds go to a general fund from which contributions are made to a variety of causes of the affiliate company's choosing.
Find the best cause for you
The Internet is an easy way to target a green cause that appeals to you.
"I think especially consumers who are environmentally conscious will want to make sure they're supporting good causes; causes they are familiar with; causes that they feel comfortable with," says Curtis Arnold, founder of CardRatings.com.
Arnold says that the waters can get muddy when trying to research which organizations benefit from the donations from the credit card issuer.
He says the best thing to do is ask them directly. Ask exactly what causes or products you can support that are environmentally friendly. Some of the issuers have their catalogs online and will allow you to look at them.
"Some will say you will just have to get the card and then find out. Don't ever settle for that answer," he says.
Many credit cards add green causes as an option to their existing rewards program -- meaning your donations go to one pot for one or more causes, not a specific cause that you might want to support.
"Really look at (the card) with a magnifying glass to find out some more information, because, ideally, you want them to give you the ability to support the cause of your choice," Curtis says.
Do green cards stack up?
Going "green" does have some slight drawbacks. There are certainly more competitive cards if you do an apples-to-apples comparison.
Generally, you can expect an interest rate of about 1 percent higher than other credit cards, Arnold says. Otherwise, the terms and conditions -- such as over-the-limit, balance transfer and late fees -- are comparable to those of other credit cards.
With the Chase World Wildlife card, which donates proceeds to the World Wildlife Fund to help save endangered species and protect endangered habitats, the variable rate ranges from 14.24 percent to 23.24 percent. The interest rate for the GE Money Earth Rewards card, which automatically contributes up to 1 percent of card purchases to buy greenhouse gas emissions offsets, is slightly more competitive, with the interest rate ranging from 12.99 percent to 18.99 percent.
Naturally, the better your credit, the better your interest rate.
http://www.bankrate.com/crt/news/cc/20070921_green_credit_cards_a1.asp?prodtype=cc
Thursday, October 18, 2007
Credit card rates may dip for some
With Americans carrying more than $900 billion in revolving -- or credit card -- debt, according to the Federal Reserve, many are hoping the half-point rate cut made by the Fed in September will bring down the annual percentage rate they pay on their credit cards.
"Lower interest rates will begin filtering through to cardholders as soon as next month's statement," says Greg McBride, senior financial analyst at Bankrate. "But don't be surprised if it takes as long as three months before you see that lower rate, as issuers are quick to pull the trigger on an increase but often drag their feet on a decrease."
Ken Paterson, director of the credit advisory group at Mercator Advisory Group, concurs: "For credit card consumers who have variable-rate cards that reprice quickly, they'll see an immediate benefit. Without immediate repricing, though, the change in rates is probably down the road."
Currently, the average APR on a standard fixed-rate card is 13.48 percent and the average variable rate is 14.57 percent, according to Bankrate's Interest Rate Roundup. Those rates have fluctuated within 50 basis points of those numbers for nearly a year. Credit card interest rates follow the prime rate, rising or falling as it changes.
Cardholders can find out when their card issuer reprices cards by looking at the terms and conditions of their cardholder agreement. Most cards are priced at 1 percent above the prime rate published in The Wall Street Journal. (The terms and conditions for all cards are available online at the issuers' Web sites.) That same disclosure should tell you when they adjust the rates. Capital One's No-Hassle Rewards card, for example, reprices quarterly, while Chase and Citibank reprice monthly.
How do card issuers calculate rates? Here's what we found in the terms and conditions on the companies' Web sites.
Credit scores influence rates
Despite a rate cut, not every cardholder will necessarily see a reduction in their APR.
"Most companies have moved to risk-based pricing," says Paterson, which means issuers assign an interest rate based on a consumer's credit score and credit history. They look for the length of the credit history, the percentage of total credit in use, the types of credit you have (credit card, mortgage, auto) and how many new accounts you've opened.
"Typically people who are flipping cards to get a better rate can get it sometimes, but changing cards frequently can negatively affect their credit score," says Paterson.
http://www.bankrate.com/crt/news/fed/winners-losers-credit-card-sept07_a1.asp
"Lower interest rates will begin filtering through to cardholders as soon as next month's statement," says Greg McBride, senior financial analyst at Bankrate. "But don't be surprised if it takes as long as three months before you see that lower rate, as issuers are quick to pull the trigger on an increase but often drag their feet on a decrease."
Ken Paterson, director of the credit advisory group at Mercator Advisory Group, concurs: "For credit card consumers who have variable-rate cards that reprice quickly, they'll see an immediate benefit. Without immediate repricing, though, the change in rates is probably down the road."
Currently, the average APR on a standard fixed-rate card is 13.48 percent and the average variable rate is 14.57 percent, according to Bankrate's Interest Rate Roundup. Those rates have fluctuated within 50 basis points of those numbers for nearly a year. Credit card interest rates follow the prime rate, rising or falling as it changes.
Cardholders can find out when their card issuer reprices cards by looking at the terms and conditions of their cardholder agreement. Most cards are priced at 1 percent above the prime rate published in The Wall Street Journal. (The terms and conditions for all cards are available online at the issuers' Web sites.) That same disclosure should tell you when they adjust the rates. Capital One's No-Hassle Rewards card, for example, reprices quarterly, while Chase and Citibank reprice monthly.
How do card issuers calculate rates? Here's what we found in the terms and conditions on the companies' Web sites.
Credit scores influence rates
Despite a rate cut, not every cardholder will necessarily see a reduction in their APR.
"Most companies have moved to risk-based pricing," says Paterson, which means issuers assign an interest rate based on a consumer's credit score and credit history. They look for the length of the credit history, the percentage of total credit in use, the types of credit you have (credit card, mortgage, auto) and how many new accounts you've opened.
"Typically people who are flipping cards to get a better rate can get it sometimes, but changing cards frequently can negatively affect their credit score," says Paterson.
http://www.bankrate.com/crt/news/fed/winners-losers-credit-card-sept07_a1.asp
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