Welcome to the 2-Minute Money Manager, a short video feature answering money questions submitted by readers and viewers.
Today’s question is about credit cards; specifically, socially responsible credit cards.
We all want to do what we can to help worthy causes, and socially responsible plastic is theoretically one way to do it. These cards look and act like regular credit cards, but part of the proceeds go to help designated charities. Seems like a simple — and worthy — idea. But is it?
Watch the following video and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said.
You also can learn how to send in a question of your own below.
For more information on this topic, check out “3 of 2018’s Best Credit Cards” and “10 Key Facts to Test Your Credit Card IQ.” You can also go to the search at the top of this page, put in the word “credit cards” and find plenty of information.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Welcome to your 2-Minute Money Manager. I’m your host, Stacy Johnson, and this two-minute answer is brought to you by MoneyTalksNews.com, serving up the best in personal finance, news and advice since 1991.
Let’s get to today’s question. It comes to us from Kate:
“I’d like to find a socially responsible credit card. I had one, but Bank of America bought them. Ugh! Are there any credit card companies that have a heart and soul? Thanks.”
OK, Kate. Here are three things to consider.
Thing No. 1: What is a socially responsible credit card?
Let’s start by defining what we’re talking about. As the name implies, a socially responsible credit card is one that donates part of its proceeds to some charitable purpose. It could be saving animals. Maybe it’s helping the local community. It could be any of millions of worthy causes.
These cards come from two different sources. One is a typical bank, like Bank of America, that finds a nonprofit partner and donates part of the proceeds to the partner’s cause. The second source is cards issued by socially responsible lending institutions — in other words, a credit card issued by a socially responsible credit union or community bank. Examples of both abound.
Thing No. 2: Are they worth it?
In order to find out if they are worth it, you’re going to have to first do some digging. Start by asking yourself if you frequently carry a balance. If you do, forget being socially responsible. What you need to do is look for the best deal, period. Paying high interest rates is no joke, and it’s unlikely you’ll find the lowest rate with socially responsible plastic. In short, charity begins at home.
Another thing to consider: If the card you’re considering is sponsored by a big bank, like Bank of America, and donates a portion of the proceeds to some wildlife fund, remember you’re still lining the pockets of Bank of America. Because not all the profits are going to that socially responsible purpose.
So you’ve got to consider, A, what the costs are, and B, if you’re really helping your cause in the most efficient manner. Which leads us to thing three.
Thing No. 3: Shop it
Before you apply for any card, use your head before your heart. See what’s out there. You might be way better off getting a lower rate — or more cash back, or better rewards — first, then separately donating to the charity. That’s my advice: Make these separate things. Donate to the charity of your choice, and get the best credit card deal you can.
Does that make sense, Kate? I hope so. That’s all we’ve got for today. See you guys next time!
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I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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