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Video: The History of Credit Cards



Today, credit cards are one of the most important sources of big bank profits. However, a look at the history of credit cards shows that things weren’t always that way.

The History of Credit Cards

While it may seem today that credit is impersonal and calculated, credit was once a privilege built around personal trust and long-lasting relationships. In the late 19th century, stores began offering credit to their best and most trustworthy customers. Instead of paying each time they visited the shop, a regular could defer payments to the future by using store-issued metal coins or plates that had their account number engraved. Shops would record the purchase details, and add the cost of the item bought to the customer’s balance owed.

By the 1920s, shops started issuing paper cards instead of metal plates, but even these became cumbersome. Consumers had to hold different cards for each shop, and this made the sector ripe for disruption.

Diners Club, the first independent credit card company in the world, did just that in the 1950s. Their cards allowed people to make travel and entertainment purchases, even with different vendors.

Bank of America took this idea and ran with it, forever changing the history of credit cards. They launched the “BankAmericard” in Fresno, California, by sending it out to all 60,000 residents at once. Soon all consumers and vendors in the city were using the same card, and the concept of mass-mailing cards to the public spread like a wildfire.

After these risky mass mailings of credit cards eventually culminated in the Chicago Debacle of 1966, they were outlawed in the 1970s for causing “financial chaos”. With no applications required, many people including compulsive debtors, crooks, and narcotics addicts were able to receive easy credit. By the time such mass airdrops became illegal, 100 million cards had already been unleashed on the U.S. population without a need for an application.

In 1976, the BankAmericard system eventually became Visa. It was soon after this point that credit cards would enter their golden age for banks: as savings rates fell in the early 1980s, the interest rates on debt did not. Credit cards became a “cash cow”, and they’ve been a key source of bank profits ever since.

Today, 80% of U.S. households own multiple cards, and they account for just under $1 trillion of consumer debt.

Original video by: &Orange

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Ranking the Credit Ratings of Major Economies

This graphic visualizes 30 country’s credit ratings, using data from the 2023 Sustainable Trade Index.





The following content is sponsored by The Hinrich Foundation

Ranking the Credit Ratings of Major Economies

Country credit ratings assess the likelihood that a country will default on its debts, and are determined by international rating agencies like Standard & Poor’s (S&P), Moody’s, and Fitch Ratings.

Generally speaking, a higher rating results in lower borrowing costs for the country, while lower ratings can increase costs or even limit access to capital. 

This graphic from The Hinrich Foundation shows the credit worthiness of 28 major economies, using an index of ratings from the three agencies mentioned above (S&P, Moody’s, Fitch).

The analysis comes from the 2023 Sustainable Trade Index (STI), which the Hinrich Foundation produced in collaboration with the IMD World Competitiveness Center.

Data Overview

To produce the STI’s credit rating metric, ratings from S&P, Moody’s, and Fitch were converted to a numerical score and averaged for each economy, with a range of 0-60 (60 being the highest). All data are as of 2022.

RankEconomyIndex Value
1🇦🇺 Australia60
1🇸🇬 Singapore60
3🇨🇦 Canada59
3🇺🇸 United States59
5🇳🇿 New Zealand57
6🇹🇼 Taiwan54
7🇭🇰 Hong Kong53
7🇰🇷 South Korea53
9🇬🇧 United Kingdom52
10🇨🇳 China48
11🇯🇵 Japan47
12🇨🇱 Chile45
13🇲🇾 Malaysia41
14🇵🇪 Peru39
14🇹🇭 Thailand39
16🇵🇭 Philippines37
17🇮🇩 Indonesia36
17🇲🇽 Mexico36
19🇮🇳 India33
20🇻🇳 Vietnam26
21🇧🇩 Bangladesh24
22🇰🇭 Cambodia18
23🇵🇬 Papua New Guinea17
24🇪🇨 Ecuador12
25🇵🇰 Pakistan8
26🇱🇦 Laos6
27🇱🇰 Sri Lanka4
28🇷🇺 Russia1

Countries with advanced economies and stable political structures typically receive the highest credit ratings, but this is always subject to change. For example, in August 2023, Fitch Ratings announced it had downgraded the U.S. to an AA+ from AAA (the highest possible).

From Fitch’s press release:

The rating downgrade of the U.S. reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.

Speaking of downgrades, one country that has received numerous in recent years is Russia, due to sanctions it faces as a result of the prolonged invasion of Ukraine. For example, S&P reduced Russia’s sovereign credit rating to a CCC-, which implies a default is imminent in the near future.

Explore the Sustainable Trade Index

This infographic was just a preview of what the Sustainable Trade Index has to offer. To learn more, visit The Hinrich Foundation, where you can download additional resources including the entire report for free.

Hinrich-IMD Sustainable Trade Index 2023
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