
CREDIT CARDSENCYCLOPEDIA OF POPULAR CULTURE
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economic growth of the post-World War II era, which saw the United
States realize the potential for becoming a true consumption-based
society. Credit card companies competed with each other to get their
cards in the hands of consumers. With direct mail solicitations,
televisions advertisements, and the ubiquitious placement of credit
applications, these companies reached out to every segment of the
consumer market. Affluent Americans were flooded with credit card
offers at low interest rates, but poorer Americans were also offered
credit, albeit with high interest rates, low credit lines, and annual fees.
As the cards filled the wallets and purses of more and more consum-
ers, the credit card became the essential tool of the consumer society.
At the same time the competition for the consumer heated up at the
retail end. First to differentiate themselves from and then to keep up
with competitors, more and more retailers, businesses, and services
began accepting the cards.
By the 1990s, just 50 years after the birth of the modern credit
card, there were more than 450 million credit cards in the United
States—about 1.7 cards for each woman, man, and child. Moreover,
more than 3 billion offers of credit cards are made annually. VISA
administered about 50 percent of the credit cards in circulation.
MasterCard had 35 percent, the Discover Card 10 percent, and
American Express 5 percent.
The amount of money channeled through credit cards is stagger-
ing. By the late 1990s, about 820 billion dollars were charged
annually—approximately $11,000 per family—and credit cards ac-
counted for $444 billion of debt. About 17 percent of disposable
income was spent making installment payments on credit card bal-
ances; the average cardholder owed approximately $150 per month.
Eight billion transactions per year involve credit cards. Simply put,
credit cards have a profound effect on the economy. To put the force
of credit cards into some perspective, in 1998 the Federal Reserve put
20 billion dollars of new money into the economy, while U.S. banks
unleashed the equivalent of 20-30 billion dollars of new money into
the same economy via new credit cards and increased spending limits.
Given the strong tie between credit card spending and the
economy, the fact that consumers have freely used credit cards to fuel
their lifestyles has been good for the country, for the stock market, and
for retirement plans. But spending is more than simply an economic
issue. Spending reflects deeper and broader social and psychological
processes. These processes may underlie the true meaning of credit
cards in American culture.
Spending money to reflect or announce one’s success is certain-
ly not a new phenomenon. Anthropologists have long reflected upon
tribal uses of possessions as symbols of prestige. In the past the
winners were the elites of the social groups from which they came.
But credit cards have leveled the playing field, affording the ‘‘com-
mon folk’’ entry into the game of conspicuous consumption. Indeed,
the use of credit cards allows people with limited incomes to convince
others that they are in the group of winners. Credit cards have thus
broken the link that once existed between the possession of goods
and success.
Money does buy wonderful things, and many derive satisfaction
from knowing that they can buy many things. Credit cards allow
consumption to happen more easily, more frequently, and more
quickly. The satisfactions achieved through consumption are not
illusory. Goods can be authentic sources of meaning for consumers.
Indeed, goods are democratic. The Mercedes the rich person drives is
the same Mercedes that the middle class person drives. Acquiring
possessions brings enjoyment, symbolizes achievement, and creates
identity. Because credit cards make all this possible, they have
become a symbolic representation of that achievement. Having a
Gold card is prestigious and means you have achieved more in life
than those with a regular card. (A Platinum card is, of course, even
better.) Credit cards are more than modes of transaction—they are
designer labels of life, and thus impart to their user a sense of status
and power. People know what these symbols mean and desire them.
The ways that people pay for their goods differ in important
social, economic, and psychological ways. Unlike cash, credit cards
promote feelings of membership and belongingness. Having and
using a credit card is a rite of passage, creating the illusion that the
credit card holder has made it as an adult and a success. Unique
designs, newsletters, rewards for use, and special deals for holders
make owners of cards feel that they are part of a unique group.
Prestige cards such as the American Express Gold Card attempt to
impress others with how much the user seems to be worth. Finally,
credit cards are promoted as being essential for self-actualization.
You have made it, card promoters announce, you deserve it, and you
shouldn’t leave home without it; luckily, it’s everywhere you want to
be, according to VISA’s advertising slogan. Self-actualized individu-
als with credit cards have the ability to express their individuality as
fully as possible.
There are, however, costly, dangerous, and frightening problems
associated with credit card use and abuse. First, credit cards act to
elevate the price of goods. Merchants who accept credit cards must
pay anywhere from 0.3 to 3 percent of the value of the transaction to
the credit card company or bank. Such costs are not absorbed by
merchants but are passed on to all other consumers (who may not own
or use credit cards) in the price of products and services. Second,
credit cards create trails of information in credit reports that reveal
much about the lives of users, from the doctors they visit to their
choice of underwear. Not only do such reports reveal to anyone
reading them information that the credit card user might not want
made available, but confusion between users can result in embarassing
and costly mistakes. Third, credit card fraud creates billions of dollars
in costs which are paid for in high fees and interest rates and,
eventually, in the price of goods. VISA estimated that these costs
amount to between 43 and 100 dollars per thousand dollars charged.
In 1997 credit card companies charged off 22 billion dollars in unpaid
bills, 60 million a day. Finally, consumers pay in direct and indirect
ways for the personal bankruptcies that credit card abuse contributes
too. In 1997 the 1.6 million families who sought counseling with debt
counselors claimed 35 billion in debt they could not pay, much of it
credit card debt. The result of these problems is the same: consumers
pay more for goods.
One of the untold stories in the history of credit cards is the
manner in which the poorer credit card holders subsidize the richer.
Payments on credit card balances (with interest rates that normally
range from 8 to 21 percent) subsidize those who use the credit card as
a convenience and pay no interest by paying their charges within the
grace period. The 50 to 60 percent of consumers who pay their
balances within the grace period have free use of this money, but they
could not do so unless others were paying the credit card companies
for their use of the money. The people who pay the highest interest
rates are, of course, the people with the lowest incomes.
In an obvious way, the convenience of using credit cards
increases the probability that consumers will spend more than they
might have otherwise. But using credit cards is also a bit like the arms
race: the more the neighbors spend, the more consumers spend to