The General Electric company is best known as an electrical company, the distant offspring of Edison Electric. It is one of the world’s largest suppliers of nuclear power plants, jet engines and other military hardware. It is also the owner of NBC television and Universal Pictures. This is the world’s seventh largest corporation. It is little wonder, then, that when General Electric Finance offers a green credit card, the Eco card, I decided it was worth putting the company’s green credentials to the test.
Using the criteria defined by US based organisation, Terra Choice, I reviewed the product by going through the available information, checking the fine print of the application forms, and then actually acquiring the product. I also contacted the company’s media department to let them know that I was doing the story and offering them the opportunity to support their claims and refute any criticism.
- Is the customer or the company paying the “green” percent?
- Who is the money paid to?
- Does the company make money on the money it puts aside for the green project?
- Is this counted as part of the company’s green credentials as well as the product’s?
- Is the calculation accurate?
The first question is easy to answer.
The interest rate quoted by the company is 18.49 per cent for purchases. This compares to 20.24 from ANZ and 18.75 respectively from Westpac for similar products. While there are a number of variables it is clearly not that the company is simply charging the customer extra to use a green card. Credit cards are notoriously expensive forms of credit so it remains a mystery how much slack Mastercard, who operates the accounts for GE, has cut the company.
The money is paid every year, on Earth Day, to “scientifically approved projects”. No information has been released by the company on what these projects are or what company will handle the offsets for them.
In the interim, the company will have access to all the money set aside for carbon credits. That means, on average it will charge the customers one percent for six months before it hands that money over. Since it is lending out that money at 18.49 per cent, then ten percent of the funds are already paid for by the financial system further reducing the contribution made by the company.
The other hidden item here is that the eco card is part of an overall plan by GE Ecomagination to green the company. Ecomagination is working with consultant GreenOrder to design a range of products to save the environment. Those other projects include desalination plants, cleaner and more efficient aircraft jet engines and diesel locomotives, wind turbines, cleaner coal and solar technology, and compact fluorescent light bulbs. In other words, credit customers may be forking out dollars to help fund General Electric’s expansion and funding of its triple bottom line.
The claim that spending $7200 a year will set aside enough to offset the average Australian’s emissions involves a little sleight of hand. One per cent of that is $72. That offsets between 3 and 10 tonnes of CO2, a tenth to a third of each Australian’s share of our national emissions. What it does represent is the average transport and energy consumption in Australia. It misses the energy in the products that a person uses and the food they eat.
All in all you would have to say that the product commits a number of the six sins of Greenwash, as defined by Terra Choice.
Its major sin is irrelevance. The fact that the company will invest in clean carbon initiatives, is completely irrelevant to the credit card initiative. Since the company will count those projects as environmental credits in its triple bottom line reporting anyway, possibly double dipping by also claiming them as carbon credits, it is possibly a fib to say that the customer is offsetting their emissions. They may be assisting GE to offset its emissions – we don’t know.
Certainly the sins of vagueness and no proof have been breached, because there is not enough information to answer all the questions raised.
Perhaps the major problem with the offering has nothing to do with the environmental claims made by the company, and is no different from most other credit card companies. Since it is an important trap that sucks in many customers, it is worth mentioning, however.
One of the major attractions of the offer is that balance transfers attract no interest for six months. This means that anyone who is carrying a high credit card debt is tempted to transfer that debt to another provider and give themselves an interest holiday.
Of course this is a way of buying customers. Credit card companies know that many people will simply use such offers to borrow more money and get further in debt. This is not illegal, though it is exploitative. What is truly dreadful, though, is the fine print that says that the transfer may take up to 31 days and that GE Money is not liable for any delays in the transfer. This means that when you ask for the balance transfer GE Money immediately debits your account and starts calculating your monthly minimum payment. Your first payment may fall due before you actually get the balance transferred. In that first month, instead of getting an interest holiday, you have to pay higher payments. You pay GE their minimum payment and you pay your existing credit card provider their normal interest.
Of course, that first payment comes off your total lent, but GE has got $100 of your money and has not spent a cent on your behalf, your existing credit card provider has the same arrangement with you that it always has. You have paid the minimum payment and received precisely nothing. Once the balance is transferred you start getting the interest relief but it now only lasts for five months or less. So you do not get a six month interest holiday, you get a five month (or less) interest holiday instead. You will be marginally in front by the end of the six months, and that saving is the cost that GE Money has paid, to acquire a new customer.
Our recommendation, do not go near this product. It is green wash of the most insidious kind and is the sort of irresponsible lending practice that encourages people to get into financial trouble.
Tell your friends not to go near it. Post links to this article to all your friends to backup your advice and tell them to pass it onto their friends.
