How Green Banking Pays You Back

New environmental initiatives let you save the Earth and some money.

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Why pay more to become environmentally responsible? The new movement toward greener banking benefits consumers' finances while reducing their carbon footprints.

A Wells Fargo rewards card lets consumers redeem points for ecofriendly purchases, such as seed-growing kits and garden composters, as well as renewable-energy certificates. Going paperless, a move almost all banks offer, enables customers to save trees and lower carbon dioxide emissions while reducing their own risk for late fees and fraud.

"It's such a win-win for everybody," says Mary Wenzel, vice president of environmental affairs for Wells Fargo. "It's a great opportunity for consumers to simplify their banking and make a change that's good for the environment." A survey released this week from Javelin Strategy & Research found that 57 percent of consumers expressed interest in green banking initiatives, and that number appears to be growing. About one third of consumers who turned off their paper statements said they did so in order to reduce their impact on the environment; three years ago, only 21 percent of those surveyed gave that reason. In addition to the environmental benefits of going paperless, it reduces consumer's risk for fraud and identity theft, says Jim Van Dyke, president of Javelin. "When you're going into the electronic world, you have more control," he says, adding that there's no such thing as antivirus software for snail mail. Indeed, the U.S. Postal Service and Federal Trade Commission warn that identity theft sometimes occurs through the mail when thieves intercept banking statements or bills before they reach their recipients.

Managing accounts online also enables consumers to more quickly identify fraud if it occurs as well as to avoid late fees, says Van Dyke. "There's no question, if you're paying your bills and managing your activities online, you'll be more on top of your finances," he says. In general, the earlier fraud is detected, the less it costs victims, he adds. Consumers also protect the environment, and their own time, by reducing the number of car trips to the local ATM or bank branch, Van Dyke says.

Wells Fargo offers $250 gift cards to those who use the company's home equity financing account to purchase a solar energy system for their home. Because solar energy reduces the operating costs of homes, the systems allow consumers to save over time, Wenzel says.

Bank of America's Brighter Planet credit card, launched last year, gives customers one "EarthSmart" point for every dollar spent. The points are automatically redeemed each month in support of renewable energy projects, and the bank says that each 1,000-point increment offsets 1 ton of carbon dioxide, the equivalent of taking a car off the road for two months.

Environmental groups point out that while many of these moves do benefit the environment, consumers often can have a greater impact with lifestyle changes. "Credit cards tend to encourage consumption, so [green rewards cards] are a double-edged sword," says Russell Simon, spokesman for Carbonfund.org, a nonprofit that promotes carbon offset and reduction. "You should think about your consumption more than the points you're earning," he adds.

Gary Gardner, senior researcher at the Worldwatch Institute, also recommends that consumers support banks with green lending practices, which prioritize projects that promote sustainable economic activity. Such programs can have a larger impact than credit card rewards or going paperless, he says.

Simon encourages concerned consumers to focus on how to lower their carbon emissions before signing up for green banking options. His organization's motto sums up his recommended approach: "Reduce what you can, offset what you can't."