Thursday, September 24, 2009

Are we charging the planet into ruin?

credit card

As I've written before, ounce for ounce, your little plastic charge cards arguably create a larger carbon footprint than any other single item you probably own. Well, maybe "create" is the wrong word; "enable" is more like it.

You see, the production, distribution and consumption of nearly all goods and services result in the emission of greenhouse gases, including carbon dioxide, and thus the creation of a measurable "carbon footprint." And now, according to, nearly 25% of all goods and services purchased in the U.S are purchased using a credit card.

Of course I'm not saying that all of those purchases are unnecessary, or that we wouldn't still manufacture and consume many of the same things even if we didn't have charge cards. But there's no denying the fact that America's trend toward uber-consumption over the past few generations has been fueled in large part by the widespread availability of consumer credit and, specifically, the skyrocketing use of charge cards. A number of studies in recent years have shown that we do, indeed, buy more stuff when we use a charge card and we're willing to pay more for it. For example, one study showed that people using credit cards at fast food restaurants spend up to 50% more than those paying with cash. Now that's likely to result in both a larger carbon footprint and a larger waistline.

The first charge card, the Diners Club card, was issued in 1950 to allow businessmen the convenience of charging their meals at 27 restaurants that were individually listed on the back of the card. Today there are more than 20,000 different charge cards available to U.S. consumers, and the average American family owes nearly $8,500 in credit card debt. Since about 60% of all active credit card accounts are not paid off monthly, that typical American family is paying about $1,200 annually just in credit card interest, to say nothing of the $43 billion in other fees collected by the credit card industry last year.

Another shocking credit card fact from The typical credit card purchase ends up costing 112% more than if cash were used. That's right, more than twice as much!

Reducing or even eliminating entirely the use of credit cards in your life is likely to make you happier -- or at least less stressed out over being in debt -- and may very well reduce the size of your carbon footprint in the process. Few people need to own more than one credit card, and studies show that if you make it a point to always pay with cash, on average you'll spend about 30% less. It's just harder, psychologically, to part with actual greenbacks. Also, in the case of discretionary purchases, make it a point to wait at least a week between the time you see an item in the store, and when you go back to buy it. I'll bet that most of the time you'll never go back to buy it.

And if your debt and spending is seriously out of control, get help from Debtors Anonymous, a nonprofit organization dedicated to helping people overcome "compulsive debting." With a mission like that, in the end it might just be one of the greenest organizations around, too.

Jeff Yeager is the author of the book The Ultimate Cheapskate's Road Map to True Riches. His website is

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