In search of a socially responsible credit card without big bank ties
Q: We've given up on socially responsible credit cards offered by groups like Working Assets - largely because the accounts are run by large, predatory lenders. Are there any alternatives for truly socially responsible cards?
A.D.F., via e-mail
A: Finding a credit card that makes donations to nonprofit organizations is not difficult, says Shawn Jacobson, a certified financial planner in Bloomington, Minn. But finding one not affiliated with a large profit-driven organization is.
Working Assets (www.workingassets.com) donates a portion of revenues from the credit cards and telephone services that it markets. But it must use a financial institution to issue the card - in this case, MBNA, the second-largest credit-card issuer in the nation. Even financial institutions with a history of supporting social causes such as Thrivent (formerly Lutheran Brotherhood and Aid Association for Lutherans) use large credit-card issuers to administer their cards.
There aren't a lot of alternatives, but you may look for regional banks that offer charitable donation credit and debit cards. Charter One Bank (www.charteronebank.com, 877-242-7837), for example, offers the Make A Difference debit card where a portion of purchases goes to one of eight charities that you choose.
Donations are generally a small percentage of card purchases. If the card donates 0.5 percent of each purchase, 50 cents is given for every $100 spent. If you pay an annual fee for the card or a high interest rate and maintain a balance, it's easy to spend more in card expenses than any charity will receive, Mr. Jacobson says.
Q: Is there a risk analysis for TIPS, such as Beta or Sharpe ratio? How sensitive are TIPS to an interest-rate rise?
M.Y., VIA E-MAIL
A: In theory, TIPS, short for Treasury Inflation Protection Securities, have little interest-rate risk because their principal and interest rise with inflation, says Tim Rowland, a certified financial planner in Scottsdale, Ariz. But they are subject to market fluctuations based upon supply, demand, a dose of fear, and good old greed.
In Mr. Rowland's opinion, TIPS can be volatile, and as such, standard deviation would be the best measure of risk. You can figure out this math equation either with a calculator that is set up to perform the function, or online if you search for standard deviation calculators.
Beta and Sharpe ratios are better suited for stocks, Rowland says.