Credit Card Overview
Fact: there are more credit cards than people in Britain and the country's debt problems are amongst the worst in the world.
When choosing a card provider, its policies on responsible lending and debt advice provision are of key importance. The green and ethical concerns you bring to who you bank with, concerns about equal opportunities or the environment, are just as applicable to who you get your credit card from.
This section also looks at the green or ethical worth, as well as the practicalities of charity affinity cards.
Does your credit card provider treat its customers responsibly?
What are charity affinity cards and how do they work?
Does your credit card provider treat its customers responsibly?
Responsible lending
According to the British Banker's Association (BBA), responsible lending means 'providing credit, based on background checks and professional judgement, to people who can accommodate repayments without getting into financial difficulty'. As the sheer number of people in debt today shows, these principles are not always well applied by credit lending institutions. In 2008 our credit card debt hit £54.4bn and continues to rise.
Transparency is key - credit card customers should be presented with the terms and conditions attached to their card up front and in plain English. It is important to check whether your provider has a responsible lending policy in place, and how it is implemented if it does exist.
Debt management
Credit card debt is all too common in the UK. Some financial institutions offer basic in-house debt advice services, the scope of which can vary greatly. Often providers will refer customers to free advice services including the Consumer Credit Counselling Service, the Citizens Advice Bureau and others.
Use our search tool to find details of your provider's debt management services. Information on this subject can be found under 'Responsibility toward Customers'. Alternatively contact your provider directly for further information.
What are charity affinity cards and how do they work?
Affinity card providers make a small donation on behalf of the card holder to the charity it is associated with.
Such charity donations average around 25p per £100 spent. So, in order to donate £100 to your charity of choice you'd have to spend £40,000 with the card. Most providers also make a one-off donation of between £5 and £25 on each new card account.
In their analysis of charity affinity cards moneysavingexpert.com suggest that a more effective way to donate money is to use cash back cards. Cash back cards operate in much the same way as affinity cards except that instead of a charity, additional money goes to the card holder and this money is usually considerably more than a standard charity card donation. The cash back card holder can then donate the money they have earned to the charity of their choice and if eligible, Gift Aid it, so rather than £1 the charity will receive £1.28. Donations on affinity cards are not eligible for Gift Aid.
View the range of charity affinity cards available on the market click here.
Your next steps
See our guide Next Steps - Credit Cards for more suggestions on how to find out about your credit card provider's green and ethical policies, how to contact them and how to find the right credit card for you.
Credit Card Search
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Credit Card Provider
MBNA Europe Bank Ltd
Green/Ethical Products
None – charity affinity cards are not considered green or ethical on their own.
Ethical Lending or Insurance
As a credit card provider MBNA does not ‘lend’ in the usual sense and therefore does not have an ethical lending policy. However, whether it provides credit in a responsible way and offers debt advice to its customers and supports financial education initiatives, is of key importance.
MBNA’s parent company, Bank of America, applies environmental criteria to its lending policy. It also has guidelines on lending within developing countries (environmental impact, cultural and social structures, and human rights) and applies the Equator Principles to project finance.
Responsible Lending
1. Credit Lending
MBNA offers unsecured credit only, though it directs potential mortgage customers to the provider First Union.
In terms of running credit checks, MBNA appears to rely solely on income-related information provided by the customer rather than using credit reference agencies.
No public data is available as to whether MBNA has a policy to avoid or prevent offering unrequested increases in credit limits to customers.
2. Debt Warning
MBNA offers the following generic warnings on its site:
- ‘Consolidating debts into one loan may cost more in the long term.’
- ‘Think carefully before securing other debts against your home.’
- ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
The institution does not use the FSA Debt Test. This test is designed to help customers find out whether they have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulty.
3. Debt Management and Advice
MBNA says that ‘various repayment options’ can be discussed with their debt advisors. It also refers customers to external agencies including Consumer Credit Counselling Service (CCCS). No information regarding payment holidays for unsecured credit customers was found.
Financial Exclusion
MBNA Europe Bank Ltd does not offer any products to the financially excluded.
In terms of working with credit unions or other mutual organisations, it states that it has ‘made donations to Chester Credit Union over a number of years’.
The bank makes a number of access provisions, including statement in Braille, large print and audio. It also offers Typetalk facility to those with hearing problems.
Environment
Information was not found or provided regarding the company’s policy on the environment, especially energy efficiency and waste management, as it relates to its own operations.
However, MBNA Europe Bank Ltd adheres to Bank of America’s environmental commitments.
In 2007, Bank of America announced a $20 billion, 10-year initiative to address climate change by championing sustainable business practices in four key areas: lending, investments, products and services, and operations.
Carbon Neutral
No evidence of a pledge on total carbon neutrality was found, though the parent company has a target to reduce emissions from its business operations by 9% in 2009.
Equal Opportunities
The bank’s equal opportunities policy addresses our key issues of gender, race, disability and sexuality.
Women on the Board
The parent company, Bank of America, report that 25% of their board members are women (2008).
Voluntary Standards & Initiatives
Not by itself, but the parent company, Bank of America, is a signatory/member of a number of charters and initiatives including:
MBNA Europe Bank Ltd
- Credit Cards
- Insurance (‘Lifestyle Protect’, Identity and Card Protection)
- Mortgages (through partner First Union)
MBNA Europe Bank Ltd
MBNA Europe Bank Limited
PO Box 1004
Chester Business Park
Wrexham Road
Chester
CH4 9WW
