How Americans learned to love the credit card
Vox
February 23, 2026
AI-Generated Deep Dive Summary
Americans are grappling with $1.3 trillion in credit card debt, a staggering figure that has sparked unusual political alliances, including President Trump's proposal to cap interest rates at 10% and support from bipartisan lawmakers like Sens. Bernie Sanders and Josh Hawley. This issue highlights the intertwined history of credit cards, banks, and regulatory frameworks that have shaped the modern financial landscape.
The origins of credit cards can be traced back to department stores in the early 20th century, which introduced credit tokens and later embossed plastic cards to extend credit to customers. By World War II, these stores expanded beyond city centers, competing with local merchants. Banks entered the credit card market in the 1950s and 1960s, driven by suburbanization and white flight, as they sought to attract affluent customers moving out of urban areas. Travel and entertainment cards like Diners Club and American Express emerged during this period, catering to business executives needing to manage expense accounts.
The rise of credit cards was further influenced by legal developments. In 1968, the Truth in Lending Act required clear disclosure of interest rates, revealing high fees that shocked consumers. Banks began relocating operations to states with fewer regulations, such as South Dakota, allowing them to charge higher rates. This practice, supported by Supreme Court rulings, enabled banks like Citibank and those in Delaware to maximize profits, contributing to the current high-interest-rate environment.
The evolution of credit cards reflects broader economic trends, including the shift from local businesses to centralized banking networks. Banks now dominate the credit card industry, earning significant profits from interest charges and rewards programs that disproportionately benefit affluent users. This system has created a cycle of household debt, with Americans carrying an average balance of $6,500. The political debate over capping interest rates underscores the growing recognition of the financial burden on consumers.
Understanding this history is crucial for readers interested in politics, as it reveals how economic policies and regulatory decisions have shaped personal finance. The current push to regulate credit card interest rates reflects a broader societal concern about debt and financial inequality, making this issue a key topic in discussions about economic justice and consumer rights.
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Originally published on Vox on 2/23/2026