Have you ever wondered where the first credit card came from? Well, look no further because in this week's blog post, we are going to discuss the root of the credit card and its interesting facts that accompany it!
The origin of the first wide-use charge account dates to the late 1940s, and is attributed to New York businessman Frank McNamara. The story goes that in the fall of 1949, McNamara went to pay the bill after entertaining a client at Major's Cabin Grill, only to realize he had left his wallet in another suit.
Luckily for McNamara, his wife was able to save him from potential embarrassment. But he continued to think about what happened and began to consider why a businessman could not freely spend what he could afford instead of just the cash in his wallet. We all know what happened after that...
Fast forward to 2011, and here are some insane facts about credit cards and debt.
Credit cards Circulation
- American Express credit: 48.9 million (Source: AmericanExpress.com)
- MasterCard credit: 171 million (Source: MasterCard)
- MasterCard debit: 123 million (Source: MasterCard)
- Visa credit: 269 million, as of Sept. 30, 2010 (Source: Visa)
- Visa debit: 397 million, as of Sept. 30, 2010 (Source: Visa)
- The average credit cardholder has 3.5 credit cards. Including both cardholders and non-cardholders, the average consumer has 2.7 cards each. (Source: "The Survey of Consumer Payment Choice," Federal Reserve Bank of Boston, January 2010)
- Only 2 percent of undergraduates had no credit history. (Source: Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009)
- On average, today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards, and bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.). Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 13 credit obligations, nine are likely to be credit cards and four are likely to be installment loans. (Source: myfico.com)
- Undergraduates are carrying record-high credit card balances. The average (mean) balance grew to $3,173, the highest in the years the study has been conducted. Median debt grew from 2004’s $946 to $1,645. Twenty-one percent of undergraduates had balances of between $3,000 and $7,000, also up from the last study. (Source: Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009)
- Seniors graduated with an average credit card debt of more than $4,100, up from $2,900 almost four years ago. Close to one-fifth of seniors carried balances greater than $7,000. (Source: Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009)
- The average college graduate has nearly $20,000 in debt; average credit card debt has increased 47 percent between 1989 and 2004 for 25-to 34-year-olds and 11 percent for 18- to 24-year-olds. Nearly one in five 18- to 24-year-olds is in "debt hardship," up from 12 percent in 1989. (Source: Demos.org, "The Economic State of Young America," May 2008)
- Discussing credit card debt is highly taboo. The topics at the top of the list of things that people say they are very or somewhat unlikely to talk openly about with someone they just met were: The amount of credit card debt (81 percent); details of your love life (81 percent); your salary (77 percent); the amount you pay for your monthly mortgage or rent (72 percent); your health problems (62 percent); your weight (50 percent). (Source: CreditCards.com research, January 2009)
- Penalty fees from credit cards will add up to about $20.5 billion in 2009, according to R. K. Hammer, a consultant to the credit card industry. (Source: New York Times, September 2009)
- From 1989 to 2004, the percentage of cardholders incurring fees due to late payments of 60 days or more increased from 4.8 percent to 8.0 percent. (Source: Demos.org, "Borrowing To Make Ends Meet," November 2007)
- One-fourth of the students surveyed in US PIRG's 2008 Campus Credit Card Trap report said that they have paid a late fee, and 15 percent have paid an "over the limit" fee. (Source: U.S. PIRG, "Campus Credit Card Trap")