Bank of America (NYSE:BAC) invented the credit card in the 1950s, and it is one financial product the bank is relying on to provide an important source of revenue.
Much has transpired since Bank of America launched its credit card program in the fall of 1958. Proper financial controls have been implemented, consumer protections have been legislated, and the financial crisis — which precipitated the Great Recession — changed how banks and consumers view credit card debt.
Before the late-2000s recession, an economic event that threw the household finances of an untold number of Americans into disarray, many “people took on too much debt,” IHS Global chief U.S. economist Nigel Gault told NPR. Of those people with too much debt, many were one of the 7.9 million Americans whose job was eliminated during the recession, and many ended up in bankruptcy court because they could not afford to pay down their debt, Gault said. “They defaulted and the debt just got wiped out.”
As the bankruptcy filings increased, lenders became more wary of issuing new credit cards, and now they are “being much more careful,” according to Gault. And consumers are, as well. “Everyone has become less willing to take on debt,” he said to NPR. In particular, credit card debt growth is nearly nonexistent, which is partially a function of more Americans paying off their full credit card balances.