Credit Cards 101: Responsible Credit Cards for Young Green Americans

According to a recent poll, 34% of Americans aged 18 to 50 do not have a credit card. For most young people, the word “finance” conjures up little more than images of suits on Wall St and a dangerously low checking account balance. Fears of crippling debt (often the result of massive student loans), predatory mega-banks, and identity theft deter us from applying for a credit card. Paying for all of your expenses with cash is a responsible option, and it is entirely possible to live a life without credit. There are, however, many advantages to educating yourself about credit cards and using them wisely. They’re small, convenient, and easy to monitor, and they allow us to accomplish a range of activities that we couldn’t with just cash or a debit card. Here are a few examples: –          Housing – Before you sign a lease on a house or apartment, your landlord will want to check your credit as a gauge of how good you are at paying your bills. If you have bad credit or no credit, a landlord will be very wary of renting their property to you. Utilities companies also use credit as a gauge of financial responsibility. Even if you can convince a landlord to rent you their property, convincing the electric utility to turn on your power without good credit could be a real challenge. –          Employment – Employers may check candidates’ credit to judge […]

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A New Years Resolution Green Americans can Get Behind

Though the holiday season is full of friends, family, and good food, the prospect of a New Year’s resolution looms like an important deadline. Whether it’s taking steps to improve your personal health or checking an item off of your bucket list, our brains tend to resist serious changes when faced with periods of comfort, satisfaction, and routine. There’s plenty of science behind this too – researchers have substantial evidence that we are at odds with our desire to change our behavior. According to a survey of 3,000 people conducted by UK psychologist Richard Wiseman, 88% of proposed New Year’s resolutions resulted in failure. An experiment conducted by Baba Shiv of Stanford University further illustrates the point. Students were split into two groups and told to remember either a two-digit number, or a seven-digit number. With their assigned number in mind, the students were then told to walk down the hallway where they were presented with a choice of snacks: either chocolate cake or fruit salad. Shiv found that the students trying to remember a seven-digit number were almost twice as likely to choose the chocolate cake over the fruit salad. So while you’re wrapping up end-of-the year projects at work or finishing final exams at school, there is evidence to support that a mind with a high cognitive load often makes poor choices. Many New Year’s resolutions involve significant willpower and commitment – like starting a diet or an […]

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Take Charge of your Card – Switch to a Credit Card that Supports People & the Planet

Today, Green America is proud to announce our newest campaign:  The “Take Charge of your Card” campaign urges consumers to move their money away from mega-banks with questionable environmental practices, restrictive fees and interest rates, and outlandish executive compensation and into smaller community development banks and credit unions. One of the best ways to remove support from banks that fail […]

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Greenwashing Alert: US Mega-Banks Rank Poorly on Sustainability Indicators

Greenwashing is prevalent amongst large US banks. In “Ranking the Banks”, a recent report by the Interfaith Center on Corporate Responsibility and Sustainalytics, seven major US banks were rated on four different indicators relating to sustainability and corporate responsibility. The report ranks the financial institutions and their activities across select “social themes,” including their environmental consciousness, their tendencies to follow […]

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Progress in the Fight against Payday Loans

Across the country, countless Americans have trouble making payments on housing, auto loans, and healthcare, as well as affording food and other basic necessities. Many people throughout the country are strapped for cash, and the payday loan industry is devouring what little savings they have left. Although they’re advertised almost anywhere you go, most people don’t know how payday loans work. When someone needs cash to pay a bill or cover an unforeseen expense, a lender can give them the funds they need to meet their obligations. As with most loans, borrowers will pay back the amount they received plus interest. The caveat with payday loans, however, is that the interest rates applied are absurdly high; often as much as 200-300%. Very few borrowers seem to appreciate the gravity of an interest rate that high – and even those who do often feel they have no other recourse. By the time the payment on a loan is due, the added interest typically exceeds the balance of the borrower’s account; they now have no money in the bank, which is the reason the loan was taken out in the first place. By handing out more cash to cover the original debt plus late and overdraft fees, payday lenders continue to rope in long-term customers. These small, yet high-interest payday loans, or “deposit advances,” as big banks have come to call them, trap consumers in a perpetual cycle of debt that is […]

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An Unfinished Mission – Senator Warren Fights for Financial Reform

An Unfinished Mission: On Tuesday, November 12, 2013, a group of financial experts gathered in the Russell Senate Office Building in Washington, DC to discuss the current state of financial industry regulatory reform, with a keynote speech by Senator Elizabeth Warren (D-MA). Speakers exhibited a sense of self-awareness that has been largely missing from the conversation on financial rulemaking; panelists […]

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What Do Your Credit Card Charges Support?

Cash or credit? In 2012, purchase volume in the United States from credit card companies Visa, MasterCard, American Express, and Discover totaled close to $2.1 trillion. Of these $2.1 trillion worth of transactions, cardholders’ issuing banks collect 1-3% in the form of an interchange fee. While 1-3% of the cost of a sandwich at Subway for lunch may seem negligible to you, consider all of the other people in the same restaurant using their credit cards, multiplied by the number of locations across the country, multiplied by the number of lunches each person purchases each year, and so on. If we crunch the numbers, we can deduce that credit-issuing megabanks collect between $20.5 billion and $61.4 billion each year on credit card transactions. The majority of that money goes to the 10 largest credit card issuing banks in the U.S. It’s difficult to believe that just a few institutions get to divvy up such large sums of money amongst themselves, especially when the individual charges to an everyday person’s credit card go largely unnoticed. As you might guess, those billions of dollars pay for high salaries and bonuses, and finance lending to fossil fuel polluters and other destructive industries around the globe. Let’s think for a minute about just how much money large banks amass from the collective totals of millions of miniscule charges, and how that money could be used to fund projects that could add real benefit to […]

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Newsflash: Regulating Banks is Good for Credit Card Customers

When Congress decided to reign in the abuses of the credit card industry four years ago through the Credit Card Accountability Responsibility and Disclosure Act (the Card Act), a lot of industry observers declared that increased regulation would lead to high costs for consumers overall.  Not so.  As reported in the New York Times, a recent study by Neal Mahoney, an economist at the University of Chicago found that federal regulation of credit card abuses has been unequivocally beneficial to consumers, to the tune of $20 billion per year. Before the Card Act, megabanks would regularly charge excessive fees and interest rates to cardholders, particularly low-income cardholders.  For example, banks would regularly jack up the interest rate on credit card holders for no reason – the cardholders were not delinquent in their payments – often to rates exceeding 25%.  Banks also played with the due dates for payments to engineer more late fees, and charged customers extra for paying by phone or over the internet.  These interest rates and fees boosted profits at megabanks, and acted as an enormous transfer of wealth from mostly working class and poor Americans to our wealthiest financial institutions, helping to drive record salaries for CEO and upper management. When the Card Act passed in 2009, the industry warned that consumers would be penalized overall with less access to credit and higher rates in general.  Overall, that has not happened.  While banks have pulled back […]

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JP Morgan Chase — Accountability Needed!

Banking giant JP Morgan Chase is in the midst of finalizing a settlement with the Justice Department, the Federal Housing Finance Agency, and the New York State District Attorney regarding its involvement in the 2008 financial crisis. While the exact number remains the subject of much debate, the bank could pay out as much as $13 billion for defrauding investors regarding securities it issued years ago. Based on its acquisition of Bear Stearns and Washington Mutual in 2008, JP Morgan is currently the subject of a massive investigation by the federal government into its mortgage lending practices. The two acquired companies were among the largest mortgage lenders in the nation, and they had reached that point largely by offering home loans to individuals with low income, bad or no credit history, or subprime borrowers.  To further complicate the matter, subprime mortgages were then “packaged” into securities and sold to investors at large scales. With hands off regulation from the government, paired with a highly competitive sales culture amongst the issuers of mortgage-backed securities, the subprime industry became too big and fast-paced to control. As we all learned, the bubble was unsustainable; when the bottom dropped out, financial institutions and insurers teetered toward collapse, and the US economy spiraled downward. If Bear Stearns or Washington Mutual had declared bankruptcy in 2008,the economy would have taken an even greater hit than it did. The federal government realized this, and asked JP Morgan […]

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Q: What happens when a mega-bank is late with a payment?

A:  They receive a nice letter politely asking that they “use maximum discretion and effort” to meet their obligations. Shame on Wells Fargo, Bank of America, Citibank, and JP Morgan Chase, who are reported to be sitting on $130 million worth of insurance payments due to victims of Superstorm Sandy.  Imagine if the banks’ customers could respond to the mega-banks with the same late fees and compound interest that mega-banks demand of their customers who are late with payments far smaller than $130 million!   It’s just one more reason to Break Up With Your Mega-Bank. From CNN: “Families need to be able to return to their homes and the state economy, which took a hit from Superstorm Sandy, needs the boost from spending on repairs,” Cuomo said in a written statement. “After insurance companies have sent homeowners checks to pay for repairs, the money should not be sitting with the bank because of red tape.” The state’s Department of Financial Services found that four of the biggest U.S. banks — Wells Fargo, Bank of America, Citibank and JP Morgan Chase — are holding more than 4,100 checks worth more $130 million. The banks were not immediately available for comment, though have maintained that they were socked with a massive amount in payouts that require processing in the wake of the storm.

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