By the looks of their website and marketing, you might assume that Working Assets is a charity. Truth be told, CREDO is a for-profit corporation who uses a philanthropic guise.
Now there’s nothing wrong with businesses donating money to charities – in fact it’s a good thing if the charities are honorable. But in the case of Working Assets, they give you the impression they’re doing a lot of good, however you can easily make the argument they’re not.
Case in point is the Working Assets credit card (also known as the CREDO credit card). But don’t take my word for it, review the math for yourself and you will get an idea of just how little (percentagewise) they’re actually giving away.
How does the program really work?
Rather than give you rewards, they donate 10 cents per purchase to various progressive groups.
Now that may sound noble, but 10 cents is a drop in the bucket compared to the credit card processing fees they’re raking in. Working Assets keep their numbers confidential, but just consider these typical industry figures to get a better understanding…
When you use a credit card to buy something, the processing fees paid by the merchant are on average 2% to 3% of the purchase price.
For example, if you made a $100 purchase, there was probably $2 to $3 in fees collected. That’s why most credit cards can afford to give you 1% rewards even if you never carry a balance.
The vast majority of those fees go back to the issuer of the credit card. Only a tiny amount goes to the payment network (Visa and MasterCard). According to CardFellow, Visa and MasterCard take as little as 0.11% of the purchase price (so almost 1/10 of 1%). The cut of the fees that go to the third-party processing company is also very small.
And small purchases? Those bring in even more fees percentagewise. That’s because in addition to the fee that’s based on the total purchase price, there’s also a flat fee of around 10-20 cents. That means even on a $3 coffee, there may be almost 30 cents in processing fees paid by the merchant.
In a nutshell, credit card issuers make an absolute killing on processing fees. That’s why, even if you don’t carry a balance and never pay interest, card issuers still love you.
10 cents per transaction = what?
Working Assets Visa is issued by Bank of America (technically their wholly-owned subsidiary, FIA Card Services). To the best of my knowledge, the profit splitting arrangement between them is not public information – they keep it confidential. Therefore I don’t know what their arrangement is, but here is a hypothetical example to give you an idea of what it might be along the lines of…
- You make a purchase of $100.00
- The merchant pays $3.00 in processing fees
- Of that, 2/3 ($2.00) goes to the card issuer
- The card issuer and Working Assets split it 50/50
The end result? $1.00 to Working Assets, while only 1/10th of that (10 cents) goes to donations.
Let me reiterate that is a completely hypothetical scenario, it’s just my educated guess. As mentioned, I nor the rest of the general public is privy to the revenue splitting arrangement they have with the card issuer. I just give you the aforementioned example to show what the numbers might look like. You of course can draw your own conclusions by researching how the revenue splits work with affinity/co-branded cards.
But wait, it gets worse
Thus far I’ve only discussed processing fees. How about all the other money being made off of the Working Asset credit card accounts?
Not everyone carries a balance, but for those that do, there are some hefty interest rates. As of the time of this review (June 2013) here’s what was listed on the application:
And then of course there are the usual late fees, foreign transaction fees, etc:
All that, yet they give a measly 10 cents per purchase in donations?
What’s in it for you? Not much!
If the progressive non-profits aren’t getting much (relative to total fee revenue collected), then it would at least be nice to see someone – YOU – getting back something for using their card, right?
Unfortunately the only reward I’m seeing listed is for new applicants. When you apply for the Working Assets Visa card you get a 2-for-1 airfare certificate. That might sound nice, but I encourage you to investigate.
The company behind the 2-for-1 offer is not mentioned in the fine print, but if it’s anything like most buy-one-get-one free flight offers, then you are hardly getting anything worthwhile.
In fact, one California company which is one of the largest providers of BOGO plane tickets sells them for a “certificate license fee” of $99 which “allows you the rights to print, personalize, design and distribute an unlimited number of certificates” (that’s a copy/paste verbatim from their website). I wonder if the BOGO offers that come with this card are similar to this? From my experience, most BOGO flight certificates given out with things like big furniture purchases and new cell phone contracts are comparable to those being sold in the aforementioned link.
Also take note that in the fine print on the credit card’s application and you will see this:
It says right there you may be issued a 1099 that reflects the value of the reward. That said, in all fairness and defense of Working Assets, I cannot confirm whether or not they are actually doing this yet.
If you want to donate money to certain organizations, your best bet is to just get a good cash back card and simply use your rewards to pay for a donation you make directly.
Another advantage of donating on your own is that it allows you to choose the organizations which are most important to you. The Working Assets credit card gives to 40. While they do solicit customers feedback on who to give to, you personally don’t get to choose where your donations go. Wouldn’t you rather select the causes most important to you, rather than giving to a spectrum that includes some you like as well as others you do not?
This review was written or last updated June 17, 2013