After last week’s post on socially responsible banks, we’ve received questions around socially responsible credit card companies. We love how everyone’s thinking about how you can align your money with your values on all levels. You are a truly inspiring community.
So credit cards…
We talked to Albert Meng, CFA who covered the credit card space as a fixed income investment analyst for Federated Investors.
Short answer: Sustainable and socially responsible banks that offer credit cards are a good place to start.
For those interested in the nitty-gritty, here are Albert Meng’s thoughts on finding the right socially responsible credit card for you, paraphrased:
Credit cards have a ton of players for each card and even more so in every transaction. The main players are the consumer, the merchant, the card network (Visa and MasterCard account for over 90% of network share; there’s also American Express and Discover, but they are tiny), the card issuer (consumer’s bank) and the merchant acquirer (merchant’s bank).
Aside from the consumer and the merchant themselves, the most significant players are probably the card issuer/issuing bank and the network (Visa/MasterCard, unless you have an Amex or Discover card). You could look into ESG differences between Visa/MasterCard/Discover (my hunch is Amex would be a little weaker since it caters more to wealthy consumers), although I’d be surprised if the ESG differences there are huge.
So that really just leaves the issuing bank, which is the area where ESG probably has the most impact. The big issuing banks are primarily the big consumer banks (Citi, Wells Fargo, Bank of America, JP Morgan Chase etc.), although you do have a couple other larger players (Capital One, Synchrony Financial) and many smaller players.
I think you can really just lump the card issuers in with what banks you think are good more broadly from an ESG perspective. For example, if you think Amalgamated is a good bank from a sustainability and social responsibility perspective, you can also get your credit card through Amalgamated. This simplifies the ESG decision-making for credit cards quite a bit, and probably gets you most of the way there in terms of being sustainable and socially responsible.
From a sustainability and social responsibility perspective, banks that are good generally should also be good banks to get credit cards with.
***A caveat is that credit cards tend to be a more differentiated product than consumer banking more generally (deposits, savings etc.). For example, if you were to say that Chase is a bad bank, you would be shutting yourself out from the Chase Sapphire Reserve card, which as of a couple years ago was the best luxury credit card by quite a bit (though not sure how it ranks on sustainability or social responsibility). Just saying that there could be more of a cost to applying sustainability standards to this part (credit cards) of financial decisions.
Thanks to Albert for his expert insight!
Be sure to read our post on socially responsible banks to help you get started. We highlighted a few banks and turns out Amalgamated Bank also offers several credit card options. If you bank with a local credit union or CDFI, be sure to look at their credit cards as well.
Now that you have a better handle on sustainable and socially responsible credit card options, go forth and pick the best card for you and your future! Feel good when you swipe.
