America's Credit Card Debt Research Paper
Looming Crisis: America’s Credit Card Debt
By Paul C.Wright
Global research, March 03, 2010
March 03, 2010
Region: USA
Theme: Global Reseach
When the U.S. economy began to melt down in 2007 and entered a rapid period of decline in 2008, all eyes were fixed on the subprime mortgage crisis. Though the mortgage crisis, triggered by spurious lending practices and unprecedented risky investment bank practices, was undoubtedly the dominant factor affecting the American consumer in 2008, credit card debt and default was also making a contribution to the deteriorating economy and collapsing standard of living. As the subprime mortgage crisis accelerated, the increasing number of people falling behind on payments or defaulting on credit card debt …show more content…
The world’s first credit card was invented in New York in 1949 when Frank X. McNamara of the Hamilton Credit Corporation created the Diners Club card after forgetting to bring his wallet to a Manhattan restaurant. Mr. McNamara figured that he could create a card that would eliminate the need for diners to carry around cash. What he did was create a cardboard, wallet sized card that members would pay an annual fee to carry and use at member restaurants and nightclubs in Manhattan. McNamara was able to sell restaurants on the idea by explaining to them that it would increase their repeat business. Within a couple of years, there were 20,000 Diners Club members. Credit cards were not used in significant numbers for another ten years after their creation – with the introduction of the American Express card. An interesting trait of the cards is that they were fee based and did not allow the card holder to carry a …show more content…
In Smiley , the plaintiff argued that credit card late fees, in this case amounting to fifteen dollars, violated California state law. Citibank successfully argued that the fees were lawful under the National Bank Act. The Act’s primacy over state law, combined with the Office of the Comptroller of the Currency’s administrative decision that “interest” includes late fees and penalties [16] , meant that nationally chartered banks could set late fees as high as they deemed necessary without worrying about interference from the states. Soon thereafter, many late fees more than doubled, as did actual interest rates for consumers who made late payments. Some late fees went as high as $155. [17] The banks, some would say, were operating with impunity and the federal government backed their interests to the detriment of the public
By Paul C.Wright
Global research, March 03, 2010
March 03, 2010
Region: USA
Theme: Global Reseach
When the U.S. economy began to melt down in 2007 and entered a rapid period of decline in 2008, all eyes were fixed on the subprime mortgage crisis. Though the mortgage crisis, triggered by spurious lending practices and unprecedented risky investment bank practices, was undoubtedly the dominant factor affecting the American consumer in 2008, credit card debt and default was also making a contribution to the deteriorating economy and collapsing standard of living. As the subprime mortgage crisis accelerated, the increasing number of people falling behind on payments or defaulting on credit card debt …show more content…
The world’s first credit card was invented in New York in 1949 when Frank X. McNamara of the Hamilton Credit Corporation created the Diners Club card after forgetting to bring his wallet to a Manhattan restaurant. Mr. McNamara figured that he could create a card that would eliminate the need for diners to carry around cash. What he did was create a cardboard, wallet sized card that members would pay an annual fee to carry and use at member restaurants and nightclubs in Manhattan. McNamara was able to sell restaurants on the idea by explaining to them that it would increase their repeat business. Within a couple of years, there were 20,000 Diners Club members. Credit cards were not used in significant numbers for another ten years after their creation – with the introduction of the American Express card. An interesting trait of the cards is that they were fee based and did not allow the card holder to carry a …show more content…
In Smiley , the plaintiff argued that credit card late fees, in this case amounting to fifteen dollars, violated California state law. Citibank successfully argued that the fees were lawful under the National Bank Act. The Act’s primacy over state law, combined with the Office of the Comptroller of the Currency’s administrative decision that “interest” includes late fees and penalties [16] , meant that nationally chartered banks could set late fees as high as they deemed necessary without worrying about interference from the states. Soon thereafter, many late fees more than doubled, as did actual interest rates for consumers who made late payments. Some late fees went as high as $155. [17] The banks, some would say, were operating with impunity and the federal government backed their interests to the detriment of the public