The Unsecured Debt/Credit Card Industry

The unsecured debt credit card industry provides credit cards to cardholders in the United States.  The industry is a vast network controlled primarily by VISA and MasterCard, as well as American Express and Discover Card.  The unsecured debt credit card industry accounts for more than $20 billion in consumer debt generated in the United States on an annual basis.

Control of the Unsecured Debt/Credit Card Industry

Around the 1980 and beyond both VISA and MasterCard, along with the bank-controlled credit card issuers make up approximately 70 percent of the credit card market domestically and have control over the use and access to networks to the advantage of those banks that are network members. The credit card industry has been changing in that some merchants have become large enough to exercise leverage in the industry, and Congress has recently gotten involved in the regulation of the credit cards through passage of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act of 2009), which gives consumers additional rights and protections from abusive practices.

The History of the Credit Card Industry

The credit card industry in the United States began in the early 1800s, when merchants and financial institutions provided credit for the purchase of farm and industrial goods. By the turn of the 20th century, hotels and department stores issued paper cards to their valued customers as a way of extending favorable credit terms.

Although these cards are limited in their usefulness except with the issuing creditor, they provided a way for different types of creditors to establish customer loyalty programs and retain customers. These type of credit programs expanded to all types of businesses and by the 1950s and throughout the later part of the century, unsecured debt and credit cards represented a significant part of the lending and financial system for many consumers.

Future of Unsecured Debt Credit Cards

The future of the industry is subject to a matter of opinion, depending on whom you ask. The near collapse of the financial services industry resulted in changes in how credit card companies deal with the public in terms of the types of disclosures and information that is required to be provided in order to offer a card to a cardholder. As the changes to the ways in which credit card companies and issuers are allowed to interact with the public take hold, the industry may experience some consolidation in order to meet the demands of consumers.

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