A Credit Card Reward for the Environmentally Conscious

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Environmentally conscious Americans routinely look for ways to reduce their carbon footprint. They carry water bottles to avoid buying one-time plastic receptacles. Some bike or take public transit to reduce emissions from a car (or simply to save money). Others compost. And some make the more radical decision to protest fracking or drilling for oil.

Those who prefer a slightly more passive approach to being environmentally friendly now can reduce their carbon footprints with credit card rewards.

Rewarded with Carbon Offsets

Sustain:Green, the rewards program creator, launched a biodegradable MasterCard (MA) offering carbon reduction rewards; the credit card is issued by Missouri-based Commerce Bank (CBSH).

Carbon offset programs allow environmentally conscious individuals to fund the planting of trees, building renewable energy alternatives or other sustainability projects. Carbon offsets through Sustain:Green will go towards Mata no Peito, an initiative to protect and replant forests in Brazil and combat deforestation, which accounts for 60 percent of the nation's greenhouse gas emissions.

The Value of Carbon Offsets in Cash-Back Terms

While it's a positive to see a unique way for everyday consumers to offset carbon emissions by simply using a credit card, a consumer would be better off getting a regular cash back card and purchasing carbon offsets.

Sustain:Green's MasterCard offers two pounds offset per dollar spent, plus a 5,000-pound bonus after the first purchase. In year one, if a customer made $5,000 worth of purchases, she would earn 15,000 pounds of carbon offsets.

Those 15,000 pounds equates to approximately 6.8 metric tons. According to Sustain:Green's Carbon Store, cardholders can purchase one metric ton (approximately 2,200 pounds) for $10 or 10 tons worth of carbon offset credits for $100.

A customer is essentially purchasing $68 worth of carbon offsets with $5,000 of spending, which equates to a 1.37 percent cash back value. However, carbon offsets need to be purchased in increments of $10, which means $5,000 would only buy six metric tons, a cash back rate of 1.2 percent.

Calculating Into a Second Year

In year two, without the bonus, $5,000 worth of purchases only equals 10,000 pounds (approximately 4.5 metric tons) of carbon offsets. This would decrease the cash back value to less than 1 percent -– $40 credit for $5,000 because offsets must be purchased in $10 increments. The cash back value reduces from 1.2 percent to 0.8 percent.

However, if depending on how pounds from year one roll over, there is likely a surplus of 0.8 metric tons rolling over to equal 5.3 metric tons of carbon offsets or $50 credit in year two. This changes the cash back value to 1 percent.

At the time of writing, Sustain:Green's website made purchase of one metric ton at $10 available to anyone, but CEO Arthur Newman stated the company would only be offering this rate to cardholders, while non-cardholders will pay a market rate of $15 per metric ton.

Cardholders will be eligible for a quarterly bonus of 2,500 pounds by spending $1,250. This equates to a bonus of 10,000 per year on $5,000 of spending ($1,250 per quarter).

By factoring in this bonus, a cardholder stands to earn 25,000 pounds in year one, equivalent to purchasing 11 metric tons of carbon offsets. A cardholder would be able to earn 20,000 pounds in year two and purchase 9 metric tons -– three more metric tons than a non-cardholder can purchase.

A More Effective Way to Give Back and Keep the Change

From a purely mathematical perspective, credit card users interested in reducing their carbon footprints would be better served by opting for a credit card with a higher cash back rate. The Double Cash card from Citibank (C) offers 2 percent back on all spending. So $5,000 of spending means $100 in cash back, which can purchase six carbon offsets from Sustain:Green at the non-cardholder rate of $15 per metric ton -- the same amount first year cardholders receive for $5,000 of spend plus a 5,000 pounds bonus.

Non-cardholders get to pocket the $10 change leftover and will retain the same rate in year two, or roll over the $10 and buy six carbon offsets. Second=year cardholders would only get 4 metric tons for $5,000 of spend, or at best five with a rollover from year one.

However, ecologically friendly consumers may prefer to hold a card from a company that they feel supports their values instead of a card from one of the biggest banks in America -– even if the latter offers better cash back.

Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She's also the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers. She is also the brand and content manager of MagnifyMoney.
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