By Brigitte Yuille

The idea of lending money through a card goes as far back as the 1800s. According to the 2005 FDIC Banking Review's paper called "Overview of Recent Developments in the Credit Card Industry", merchants and financial intermediaries provided credit for agricultural and durable goods. The cards soon began to spread to other industries. Hotels and department stores presented their most valued customers with paper identification cards. The cards were mostly used at that one location; however, some local merchants would accept the competitors' card.

It wasn't until the late 1950s that Bank of America (NYSE:BAC) introduced the BankAmericard, the first general purpose credit card. The bank created a separate credit card operation entity that in the mid 1970s became known as VISA (NYSE:V). In 1966, competing banks spawned rival cards as a result of Bank of America's success. This network of bank owners later created an association that came to be known as MasterCard (NYSE:MA).

Throughout the years, the credit card industry has been the subject of much debate. On the one hand, many critics have blamed credit card issuers' loose restrictions for high fees and rates, which are often hidden in complex credit agreements. The deregulation of the industry that occurred in 1970s and 1980s is often blamed for this. However, in 2009, U.S. President Barack Obama signed a new bill into law to curb the most controversial credit card practices, including interest rate hikes, penalties and marketing to college students. (For more information about what this law entails, read How Your Credit Card Is Changing.)




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