December 9,2008
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How Did We Get So Plastic?, Pt. 1 –
– Birth of a Financial Savior?It all started in Fresno back in 1958. A new concept was introduced call BankAmericard. Mass-mailings were conducted, drawing savvy American consumers into a new world of financial fluidity. Instead of clumsy cash and cumbersome checks, all consumers needed to go shopping was a convenient credit card. Through the years, the resilience of credit cards has been remarkable. Having reached the pinnacle now, credit card debt has reached the $822 billion mark. Who could've known?
The credit card industry has proven as resourceful as wisteria, branching into every area of exchange. It even flourishes during economic downtimes (except this current one). So, this young fledgling called BankAmericard, issued by BankAmerica grew so well in the first few years that it managed to span the Atlantic Ocean (something even wisteria can't do). Only problem there was, Europeans weren't too hip on embracing some other country's logo and there was apprehension. Problem solved quickly...every European considers the word ‘visa' to be of household variety. It worked well and the new VISA credit card began to flourish better than ever.
But this was only the beginning. Many ‘common' people were mistrustful of this ‘strange new medium'. Common-folk Americans still considered allowing a bank (even with an American name) to provide a replacement to the all-so-well understood ‘cash', too mysterious. Debt was scary. Still, over time, credit cards became more familiar in everyday life. As cash flow changes with economic weather, more and more Americans turned to the solace of credit.
When bad recession came in the early 1980s, the credit card industry stepped in aggressively. Preying on the poor and elderly, they introduced themselves as the financial-flow savior. They provided easy access to credit to those people. The obvious risk was calculated in favor of those writing the contracts, of course. Large sums of revenue were reaped from defaults via high interest and penalties.