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Ethical Credit Cards: A Guide
Ethical credit cards and other financial products and services are becoming increasingly popular as more and more people desire to know that their financial choices are having a positive impact on the wider world (or at least, not a negative one). This article takes a look at some of the things to consider when choosing an ethical credit card.
What Exactly Are Ethical Credit Cards?
First of all – just what is an ethical credit card? Broadly speaking, these are cards that support a particular cause (also known as affinity credit cards or charity credit cards) and/or those which are issued by a financial institution which has clear ethical policies, such as the Cooperative Bank or Smile bank in the UK.
Different people obviously have different views on what is and isn't ethical – for example, some people might be against animal testing, but not be too concerned about whether or not their bank deals with repressive regimes, or vice versa. Another person might want to support children's charities, but be less concerned about the environment. As well as charity cards, affinity cards are also available to support things like sports teams, political parties etc, or they may be affiliated with a number of projects related to a specific cause, like rainforests etc.
With charity cards (and other affinity credit cards), the issuing bank
typically makes a lump sum donation to the charity when you take the
card out (or make your first purchase), and then donates a percentage
of your expenditures on an ongoing basis. This is usually a pretty
small percentage (such as £0.25 for every £100 you spend), but if you
use your card a lot, these small sums can make a significant
contribution to the charity concerned.
If you take out a credit card to support a specific charity, you will have to deal with whichever bank issues the card. Charity cards are available from most of the mainstream UK banks, and there is a huge variety of ethical credit cards available that support a number of charities, including animal welfare, humanitarian and environmental charities, so if you want to support a particular charity or type of charity, chances are you'll be able to find a card to suit. However, if you are more concerned about dealing only with institutions that have a clear stance on issues that concern you (such as not providing services to pharmaceutical companies, or funding for arms), your choice will be more limited – in the UK, only the Cooperative Bank and Smile (which is part of the Cooperative group) really have very strong general ethical policies (fortunately they also offer a range of charity cards and generally excellent service).
Things To Consider When Choosing An Ethical Credit Card
Using an ethical card might give you a good feeling about how you spend your money, but before taking one out, it's good to be aware of some things. In general, ethical credit cards work in the same way as normal cards – the APRs tend to be similar, you apply in the same way, and other perks and benefits (like travel insurance) tend to be the same. However, you won't necessarily get the best deal with an ethical card – you might get a lower interest rate elsewhere, fees may be lower on other cards, and you won't get the cashback that some cards offer. These things may not matter to you, but if you're concerned with getting the best possible credit card deal for yourself personally, ethical cards are unlikely to be the best option (if that's the case, you may prefer to take out a normal card, and make separate donations to support your charity). Also, if you want the charity to benefit as much as possible, you should use your ethical card for the majority of your purchases.
UK Ethical Credit Card Providers
Most financial institutions offer at least one affinity or charity card, so it's worth browsing the sites of a number of these (or visiting a credit card comparison site) to see what's available. Alternatively, you could get in touch with your favourite charity, to see if they have an affiliated card. If you only want to deal with institutions that have a generally socially responsible approach, check out the Cooperative Bank and/or Smile (Smile is internet only).